2016 report Annual AB GETINGE
Annual report 2016 The Group 1 2016 in brief 2 This is Getinge 4 Comments by the CEO 6 Business drivers 8 Strategy 14 Acute Care Therapies 22 Surgical Workflows 26 Patient & Post-Acute Care 30 Sustainability 34 Environment 36 Values and culture 38 Employees 40 The share
Financial information 42 Administration report 45 Corporate governance Report 50 Getinge Board of Directors 52 Getinge Executive Team 54 Proposed allocation of profits 55 Consolidated financial statements 55 Income statement 55 Statement of comprehensive income 56 Balance sheet 57 Changes in shareholders’ equity 58 Cash-flow statement 59 Notes 79 Parent company 79 Income statement 79 Statement of comprehensive income 80 Balance sheet 81 Changes in shareholders’ equity 81 Cash-flow statement 82 Notes 86 Auditor’s report
Getinge information 89 Multi-year overview, Group 90 Multi-year overview, business areas 92 Largest markets 93 Acquisition history 94 Quarterly data 95 Alternative performance measures 96 Quality and environmental certifications 96 Environmental data 96 Social data 97 Addresses
Other 101 Definitions 101 Reading guide 101 Distribution policy 102 AGM and nomination committee 103 Financial information
Every care has been taken in the translation of this Annual Report. In the event of discrepancies, the Swedish original will supersede the English translation. 2016 A year of change
29.8Sales per market regionSales per market region Sales per business areaSales per business area Net sales SEK billions 3.9% EBITA*-growth
EMEA, 42% (12,552 M) EMEA, 42% (12,552 M) Acute Care Therapies, 40% (11,804Acute M)Care Therapies, 40% (11,804 M) Order intake SEK 30,142 M Earnings per share, SEK 4.98APAC, 18% (5,384 M) APAC, 18% (5,384 M) Patient & Post-Acute Care, 25%Patient (7,456 & Post-AcuteM) Care, 25% (7,456 M)
Dividend per share SEK 2.00Americas, 40% (11,820 M) Americas, 40% (11,820 M) Surgical Workflows, 35% (10,496Surgical M) Workflows, 35% (10,496 M)
Key figures 2016 2015 Order intake, SEK M 30,142 30,431 Growth in order intake, adjusted for exchange-rate effects and acquisitions, % –0.8 1.9 Net sales, SEK M 29,756 30,235 Net sales, adjusted for exchange-rate effects and acquisitions, % –1.5 1.8 Restructuring and integration costs, SEK M –1,313 –657 Acquisition expenses, SEK M –21 –33 EBITA before restructuring, acquisition and integration costs, % 4,341 4,179 EBITA margin before restructuring, acquisition and integration costs, % 14.6 13.8 Earnings per share after comprehensive tax, SEK 4.98 5.83 No. of shares, thousand 238,323 238,323 Interest-coverage ratio, multiple 5.6 4.6 Working capital, SEK M 43,383 40,771 Return on working capital, % 8.3 8.6 Return on shareholders’ equity, % 6.0 8.5 Net debt/equity ratio, multiple 1.12 1.17 Cash conversion, % 73.6 66.7 Equity/assets ratio, % 37.9 36.8 Equity per share, SEK 87.76 82.21
* EBITA-margin before reconstructuring, acquisition and integration costs.
GETINGE ANNUAL REPORT 2016 1 THIS IS GETINGE
Passion for life
Getinge is built on a genuine compassion for people’s health, safety and well-being. Based on long experience and in close cooperation with the healthcare industry, Getinge develops innovative solutions that improve people’s lives, today and tomorrow – which is in line with the brand promise, Passion for life.
Getinge provides products and services for surgery, intensive-care, long-term care, infection control and sterilization. Founded in 1904 on » … the company has the Swedish west coast, the company has grown to become a global market leader in many segments. grown to become a Today, Getinge generates sales of close to SEK 30 billion and con- ducts sales via proprietary companies throughout the world. The pro- global market leader duction is conducted at facilities in Brazil, Dominican Republic, France, Canada, China, Germany, Poland, Sweden, Turkey, the UK and the US. in many segments. « In total, Getinge has over 15,500 employees in more than 40 countries. EMEA is the largest region with 42% of sales, closely followed by the Americas with 40%, and APAC with 18%. 85% of sales are to hospitals, while elderly care accounts for 8% and the life science industry for 7%.
Vision To become the world’s most desired medtech company
Values
Getinge’s cultural values are based on a strong sense of a shared commitment with people in mind.
Passion Ownership
Collaboration Excellence
Openness
2 GETINGE ANNUAL REPORT 2016 THIS IS GETINGE
Our business
Getinge’s offering is mainly targeted at care providers, care givers and care receivers. The offering is organized in three areas: Acute Care Therapies, Surgical Workflows and Patient & Post-Acute Care.
Acute Care Therapies Offers pioneering technologies and solutions for intensive- care, surgery and cardiology.
Net Sales 2016 Getinge’s position Among the global leaders in all 11.8 product segments. SEK billion
Surgical Workflows Offers efficient solutions for infection control and operating rooms.
Net Sales 2016 Getinge’s position Among the global leaders in 10.5 all product segments. SEK billion
Patient & Post-Acute Care Offers solutions for daily tasks of lifting and transferring patients, as well as wound care and prevention of deep vein thrombosis.
Net Sales 2016 Getinge’s position Global leader within Safe Patient Handling and strong contender 7.5 in the other segments, such as SEK billion Pressure Injury Prevention.
GETINGE ANNUAL REPORT 2016 3 COMMENTS BY THE CEO
Efficiency enhancements and key decisions for the future
2016 was yet another year of change and key decisions for the future, based on an additional review of the strategy that was launched in the autumn of 2015. This has resulted in adjustments to create increased focus, which will strengthen us.
When summarizing the past year, I see several areas that were particularly positive. I am very pleased with the achievements made in the Big 5 efficiency enhancement program. In total, the program generated savings of approximately SEK 400 M, which contributed to an increase in profitability before restructuring costs, despite lower sales. Streamlining the operations in this manner means that we can expect high lev- erage on profitability when sales turn around. We also saw cash flow strengthen toward the end of the year, yet another sign of our efficiency enhancements.
A strong brand During the year, we developed and prepared the brand trans- formation that we are now executing. This change will reduce the complexity of our brand portfolio and clearly position Getinge as a supplier and a partner of integrated medical-de- vice solutions for the healthcare sector.
Prepared for several product launches in 2017 Both the organic order intake and net sales performed slightly negatively during the year, which obviously is not satisfactory. The development was challenging in several important growth markets, regarding capital goods. In addition, our focus has been too internally oriented during the year. We launched plans to turn this trend around in terms of both our regional sales organizations and our product offering. In 2016, we have upgraded our product portfolio, for exam- ple in the area for advanced operating tables, lights and pen- » During the year, we intensified dants, but also in the growing area of low temperature sterili- zation. This is followed up with a large number of product our focus on quality, which updates and launches of several new products in all business resulted in the strengthening areas during 2017. All in all, we expect moderate organic growth in net sales of our quality control. « for 2017.
4 GETINGE ANNUAL REPORT 2016 COMMENTS BY THE CEO
Proposal of potential distribution of operations A strategic review was completed in the autumn to enhance the effects of the ongoing change process and also clarify Getinge’s Focus 2017 long-term strategy. The review resulted in a need to intensify Shift from internal focus in 2016 to a more external focus to better capture growth opportunities for all of the busi- focus and thereby create profitable growth for all ness areas. To achieve this, a decision was made to prepare for a three business areas. listing and distribution of Patient & Post-Acute Care to sharehold- Continued work on strengthening the quality ers. The final proposal is subject to a decision by the shareholders management system according to the Consent at an Extraordinary General Meeting during autumn 2017. Should Decree with the FDA. the Meeting approve the Board’s coming proposal, the aim is to complete the distribution not later than the first quarter of 2018. Preparations for a potential distribution of Patient The distribution will increase the ability of both companies to & Post-Acute Care, including review of targets successfully realize their strategies and to best continue to for both operations. enhance customer benefits and shareholder value. The work on Conduct a large number of product launches and preparing for this structural change will continue in 2017. ensure future growth via focused and effective R&D.
Continued quality enhancements Continued efficiency enhancements to and Quality and patient safety are the foundation of our business and development of the organization. a prerequisite for our future development. During the year, we intensified our focus on quality, which resulted in the strengthen- ing of our quality control. The remediation activities linked to the Consent Decree with the FDA continued at a rapid pace and an additional SEK 400 M was reserved for these measures in the autumn. A new govern- ance model was introduced at the end of the year for the units under the Consent Decree. In brief, the model will create greater control and clarity in order to meet established time frames.
Intensified focus moving forward In conclusion, I can state that it has been a year that has demanded considerable effort and hard work from Getinge’s employees and I would like to take this opportunity to express my thanks for their tremendous performance during the year. More hard work lies ahead of us, but we are maintaining the pace of our activities to enhance our competitiveness and thereby ensuring future profitable growth. We are increasing our investments in research and development to ensure new products and solutions. We are continuing our work to create a streamlined organization and to focus on continuous improvements and efficiency enhancements in the operations. Mattias Perjos was appointed President and CEO of 2017 will be an eventful year for Getinge, which will be managed Getinge Group in autumn 2016. He will take office on by the new CEO, Mattias Perjos, who will take office March 27 and I March 27, 2017. Mattias Perjos most recently held the give him a warm welcome to Getinge. I myself will take on the role role of CEO of Coesia Industrial Process Solutions of CEO for Patient & Post-Acute Care, which also has a very excit- (IPS) as well as serving as Managing Director of Coesia ing future ahead. All in all, I look forward to being part of a suc- International. Mattias Perjos has an extensive indus- cessful 2017. trial background and international experience, and also an impressive track record of consistently achiev- Joacim Lindoff ing improved business results. Acting President and CEO
GETINGE ANNUAL REPORT 2016 5 BUSINESS DRIVERS
Drivers in a global market
Several different business drivers affect the market conditions of the global healthcare industry. Getinge is working to meet each and every one of them in a structured and sustainable manner.
Greater consolidation in healthcare Cost efficiency and documented Expansion of healthcare in The global healthcare industry has clinical results emerging markets undergone many changes since the Due to demographic changes, primarily in The economic performance of emerging financial crisis in 2009, including declin- Europe and the US, the need for qualified markets is enabling more countries to ing reimbursement rates and greater healthcare and elderly care is continuing develop advanced healthcare. Due to consolidation. This has resulted in fewer to grow. Today, these markets are charac- greater prosperity and a growing middle and larger players, which in turn has led terized by a growing number of elderly class, many of these countries are to increased price pressure. Purchasing people who need healthcare, and an investing heavily in the expansion of is now increasingly centralized and con- increased incidence of lifestyle-related both private and public healthcare. ducted higher up in the decision-making diseases, particularly various types of Products with simpler functionality and hierarchy. This means that central pur- cardiovascular diseases. In these a lower price that accelerate the expan- chasing departments are usually markets, there is a need to provide better sion of healthcare are in demand pre- responsible for purchasing, rather than care for more people without increasing dominately in public healthcare. How- physicians or healthcare professionals. the cost to society. Accordingly, it must ever, the purchasing power in these be possible to demonstrate that products markets is generally lower than in and solutions can provide both docu- mature markets. mented clinical results and deliver economic benefits.
6 GETINGE ANNUAL REPORT 2016 BUSINESS DRIVERS
Opportunities for Getinge
The overall business drivers, as described on the opposite page, bring several opportunities for Getinge. The most important ones are presented below.
Focus on entire product offering Solutions for increased efficiency Getinge can offer complete and integrated solutions Getinge’s offering includes IT systems for medical pro- tailored to customer needs and challenges. cesses and real-time resource planning for hospitals, technology that helps to optimize work processes and Customer-driven innovation the flow of patients. Accordingly, maximum utilization of Getinge’s focus on customer-driven innovation means a operating rooms for instance is guaranteed, which con- product development process that involves the customer tributes to increased efficiency enhancements of from concept to finished product. The aim is to deliver healthcare in general. solutions that meet customers’ actual needs, rather than solutions driven solely by technological innovations. Support and education Getinge provides professional complete solutions for Simpler functionality at a lower price service and support. In addition, training is offered to Getinge is expanding its offering to include products with support users, which ensures that the products are used simpler functionality at a lower price in order to capitalize properly and effectively, all to guarantee the best possi- on the rapid growth and align with the lower purchasing ble results in healthcare. power of emerging countries.
GETINGE ANNUAL REPORT 2016 7 STRATEGY
Getinge’s transformation program
Getinge’s transformation program, which was launched during the autumn of 2015, includes initiatives to reposition the company for higher organic growth as well as increased competitiveness.
A key success factor for Getinge is the company’s solid platform: desired medtech company in the world. In order to accomplish dedicated and passionate employees, values based on entrepre- this there is a need for an efficient and competitive organization neurship and efficient corporate governance. In all medical device that produces more value for a lower cost. At the same time, it is companies, quality is a vital aspect and must permeate the entire important to continue developing products and services corre- operations in order to meet the safety requirements that are a sponding to the customers’ needs. prerequisite for players in the medical device industry. As a consequence, Getinge launched a transformation program The goal is for Getinge to be a successful company in several in autumn 2015 aimed at enabling realizing the company’s full perspectives, in order to reach the vision of becoming the most potential.
The transformation program comprises three components aimed at:
Improving profitability by leveraging the Group’s scale to a greater extent. Big 5 Five focus areas have been identified to effectively drive the cost agenda.
Reigniting growth through alignment of the product portfolio, and a sales organization that offers Getinge’s complete product portfolio and is more Customer clearly tailored to healthcare’s needs and value chain. The focus is on Centricity structuring the organization to deliver increased clinical and economic value through the unique customer offering, thereby responding to the challenges and changes being faced in healthcare.
Organize Establishing a new organizational structure that will facilitate a timely to win and smooth implementation of the program.
8 GETINGE ANNUAL REPORT 2016 STRATEGY
Big 5 In order to improve the Group’s profitability, an efficiency enhancement program was initiated with five focus areas, Big 5. The savings from Big 5 amounted to approximately SEK 400 M in 2016.
Focus Area Examples of activities in 2016
Lean support and administration Enhanced coordination and efficiency, primarily in finance, sales, service, marketing and HR. In 2016, a Shared Service unit was established in San José, Costa Rica, serving the Americas. Since 2014, there has been a Shared Services unit in Cracow, Poland, serving EMEA.
Indirect spend optimization Activities to reduce costs of indirect purchasing through consolidation of the supplier base and coordinated negotiations.
Direct spend optimization A global structure was designed for lower costs via direct purchases of input goods linked to Getinge production.
Portfolio simplification Streamline and optimize the product portfolio and remove unprofitable products. A new brand strategy was developed to clarify the offering and further strengthen Getinge’s leading positions.
Commercial excellence A shared CRM system was established to support collaboration between sales teams. The plat- form has been rolled out in Australia, France, India, the Nordic region and New Zealand. The roll- out will continue in the rest of the world in 2017–2018.
Customer Centricity To generate growth, the sales organization will offer the complete product portfolio under one brand, Getinge. Focus is targeted to delivering documented clinical and economic benefits. This is summarized under the name of Customer Centricity, which comprises the following five focus areas:
Focus Area Examples of activities in 2016
Customer-centric business Change processes initiated, targeting the offering to even more clearly reflect customer needs for model integrated solutions that enhance quality and productivity and the efficiency of patient flows.
Focus on entire product offering Established joint market organizations offering Getinge’s complete product portfolio.
Innovation based on customer A process established for customer-driven innovation focusing on documented clinical and economic value benefits for customers. This will be implemented in the product development process from 2017.
Increased exposure in the US The ambition going forward is to better match regional exposure, taking into account growth poten- and emerging markets tial and size. For example, Getinge has prepared a product development plan for the value segment in emerging markets. The target is to develop products in 2017–2018 with launch scheduled for 2019–2020.
Continued focus on acquisitions Getinge continuously identifies acquisition candidates based on the criteria of generating growth and strengthening leadership in priority segments.
Organize to win In order to achieve the activities within Big 5 and Customer Centricity, a organizational structure suited for this is needed.
Focus Area Examples of activities in 2016
Establish a suitable organization Implementation of the new organization valid as of January 1, 2016.
GETINGE ANNUAL REPORT 2016 9 STRATEGY
Enhanced focus – potential distribution of Patient & Post-Acute Care
An additional strategic review was completed in autumn 2016 to enhance the effects of the ongoing change process and also clarify the Group’s long-term strategy that better captures growth opportunities for all three businesses.
As a result of the review, Getinge has decided The preparation activities are based on a care- to focus on two business areas – Acute Care fully managed project plan to ensure a controlled Therapies and Surgical Workflows. process and thus a well-worked through proposal. Based on this long-term strategic direction, The final proposal is planned to be presented to the Board tasked the Getinge Executive Team the shareholders for decision at an Extraordinary to prepare for a potential distribution and list- General Meeting in the autumn 2017. The aim is to ing of Patient & Post-Acute Care, formerly complete the listing not later than during the first Extended Care, in accordance with the Lex quarter of 2018. ASEA* rules. Following a split, both companies will have a more concentrated focus, with more opportunities to continue to develop products and solutions to meet customer needs and thereby help solve » Following a potential split, healthcare challenges. For Patient & Post-Acute Care this will, for exam- both companies will have a more ple, create greater opportunities to capture the possibilities from the growing market within long- concentrated focus, with more term care. The financial targets for both companies will be opportunities… « determined and presented in the autumn of 2017 as part of the preparation work.
* Lex ASEA means, in brief, that a parent company can, under certain circumstances, distribute the company’s shares in a subsidiary to its shareholders without any immediate Swedish taxation arising on the distribution for the shareholders.
Plan for a potential distribution of Patient & Post-Acute Care
On October 18, 2016, the Board of Directors announced that the Excecutive Team had been given the task of preparing for a proposal of a potential distribution and listing of Patient & Post-Acute Care. The preparations for this have started, and a new management team has been appointed, with Joacim Lindoff as CEO. Getinge’s former CEO, Johan Malmquist, is pro- posed for the position as Chairman of the Board.
Q1 Q2 Q3 Q4 Q1 2017 2017 2017 2017 2018
Extraordinary Potential listing of Preparations for potential distribution General Meeting the new company
10 GETINGE ANNUAL REPORT 2016 STRATEGY
GETINGE ANNUAL REPORT 2016 11 STRATEGY
From multiple to one brand
From spring 2017, Getinge will group all of its brands under a single name to sim- plify its customer offering and to further clarify Getinge’s position as a world-lead- ing medical device company. Preparations have been under way for much of 2016.
Over the years, Getinge has grown as a company and so has its To safeguard the brand equity built over the years in the other brand portfolio. Getinge has created a fairly complex brand struc- brands, for example Maquet, they will be transformed into prod- ture with over 70 brands, which has sometimes been difficult for uct family names under the Getinge master brand. the sales force to convey to customers. Continuing to use all Unifying the company under one brand is in line with the on these brands would also prevent the company from acting effi- going transformation program and aims at positioning Getinge ciently and building strong brand equity. better toward the customers and further strengthening its posi- The task of creating the new brand was conducted over the tion as a global leading med-tech company. course of 2016 and was based on extensive research. Interviews were carried out with customers from the largest markets and with Getinge employees. Discussions with other players in the med-tech industry also provided information about market trends. » … will be transformed into The result is that Getinge is now unifying all former brands product family names under under the Getinge name – with a new company logo and graphic identity which will reinforce the customer centric face of Getinge. the Getinge master brand. «
12 GETINGE ANNUAL REPORT 2016 STRATEGY
Getinge’s financial targets
In the autumn 2015, the financial targets stated below were established for 2016–2019. The targets will be reviewed and presented during the autumn of 2017 as the preparation of the proposal for a potential listing and distribution of Patient & Post-Acute Care is finalized.
Annual organic growth in net sales Annual in EBITA*-growth 2–4% >10% Outcome 2016: –1.5% Outcome 2016: 3.9%
The declining net sales in 2016 are mainly attributable The efficiency program, Big 5, resulted in extensive to weaker sales in Surgical Workflows and Patient & savings during 2016. The savings, however, could not Post-Acute Care during the two final quarters. Meas- offset the full effects of declining sales. As a conse- ures are being taken to reverse the trend, including quence, EBITA*-growth amounted to 3.9%. extensive product launches in 2017. *Before restructuring, integration and acquisition costs.
Return on equity Cash conversion 15% >70% Outcome 2016: 6.0% Outcome 2016: 73.6%
Return on equity fell short of the target of 15%, as a Getinge’s cash conversion was strengthened gradually result of reduced net profit. Net profit was negatively during the autumn of 2016 and amounted to 80.4% in affected by this year’s restructuring and integration the last quarter, which contributed to reaching the costs, which amounted to SEK 1,313 M. target for the full year.
GETINGE ANNUAL REPORT 2016 13 Acute Care Therapies
Pioneering solutions that save lives
Acute Care Therapies develops pioneering technologies and products for intensive-care, surgery and catheter-based interventions. The offering also includes equipment for treating patients while in transport.
Acute Care Therapies offers solutions for life support in acute Result 2016 health conditions. The offering includes solutions for cardiac, Acute Care Therapies continued to perform well despite intense pulmonary and vascular therapies and a broad selection of activities associated with the quality management system and the products and therapies for intensive care units (ICU). Consent Decree with the FDA. ICU products and solutions, together with equipment and The net sales totaled SEK 11.8 billion (11.6) in 2016. The order disposables for cardiac, pulmonary and vascular therapies, cre- intake increased by 3.1% organically and net sales grew organically ate a broader selection for patient care in acute health condi- by 1.4% during the year, mainly related to higher demand in the Car- tions. Furthermore, revolutionary solutions are offered for diovascular segment. Growth was evenly distributed geographi- mobile ventilation and portable heart-lung therapies. cally. Organic net sales increased by 1.5% in EMEA, by 1.4% in the By focusing on future-oriented technology that makes daily Americas and 1.3% in APAC. operations easier and improves patient care, Acute Care Acute Care Therapies reached a gross margin of 55.5% (55.5%) Therapies follows the patient throughout the continuum of care for the full year, which is in line with the previous year. The EBITA- for surgeries and cardiac, pulmonary and vascular therapies. margin before restructuring, integration and acquisition costs was In 2016, the new range of ventilators, SERVO-U, SERVO-n and also unchanged (19.7%). EBITA amounted to SEK 2.3 billion (2.3). SERVO-air, captured market shares. With CARDIOHELP, which is Non-recurring costs, amounting to SEK 751 M, had a negative targeting the extracorporeal life support segment, Acute Care impact on EBIT, which decreased by 25.7% to SEK 1.0 billion (1.3). Therapies has continued to build a world-leading position. These non-recurring costs are related to such matters as the Con- sent Decree with the FDA. Loss of revenue attributable to the Consent Decree with the FDA was offset by higher sales volumes and a favorable product mix.
Important activities 2016 Focus 2017
FDA-related remediation activities Continued FDA-related remediation activities
Jens Viebke appointed as new President Increased R&D investments to capture long-term
High activity in the transformation and efficiency program growth opportunities Successful product launches
14 GETINGE ANNUAL REPORT 2016 Acute Care Therapies
Product Segments Critical Care Cardiopulmonary Cardiac Systems Vascular Interventions
Getinge’s position Among the global leaders in all product segments.
Peers and competitors BD, Dräger, Edwards Lifesciences., GE, Gore, Hamilton, LivaNova, Medtronic, Teleflex, Terumo.*
Examples of solutions and global market positions*
Anesthesia Acute Care Hemodynamic Surgical Extracorporeal Counterpulsa- Premium anesthe- Ventilation Monitoring Perfusion Life Support tion therapy sia systems Ventilators for the Disposables and Heart-lung Portable devices Pumps and dis- premium and monitors machines and dis- and disposables posables posables value segment
4 2 2 2 1 1
EVH Beating Heart Aortic Peripheral Covered Thoracic Systems for endo- Surgery Surgical Grafts Vascular Grafts Stents Drainage scopic vessel har- Heart stabilizers & Grafts for abdomi- Grafts in polyester Balloon expand- Chest drains and vesting devices for con- nal aortic and tho- and polytetrafluo- able covered thoracic catheters necting vessels racic aortic reten (PTFE) stents
1 2 1 2 2 1
*Getinge research.
Rubrik Rubrik Share of Group sales Sales per market area NetRubrik Sales and EBITA margin**
MSEK %
12,000 20 Net Sales Acute Care EMEA, 31% 10,000 16 Therapies, 40% APAC, 18% 8,000 EBITA margin Americas, 51% 12 6,000 8 4,000
2,000 4
0 0 15 16
** EBITA margin before restructuring, acqui- sition and integration cost.
GETINGE ANNUAL REPORT 2016 15 Acute Care Therapies
Continued focus on quality
Getinge has been working intensively to ensure the procedures and processes in the company’s quality management system in accord- ance with the remediation program launched in 2013.
The FDA, the US Food and Drug Administration, inspected several under the Consent Decree. The change will further clarify Medical Systems’ (now Acute Care Therapies) manufacturing units responsibilities and authorities that will enhance the level of in 2013, which led to observations about procedures and processes control in the ongoing change process in order to established in the quality management system. Extensive internal work began time frames. immediately to strengthen the quality management system, while at the same time dialog began with the FDA. Phase one of three in the Consent Decree This resulted in a Consent Decree that was formally approved by The Consent Decree consists of three phases and work will the FDA in February 2015. The contents of the Decree are aimed continue for many years. All of Getinge’s entities are in the first primarily at raising the level of the quality management system and phase and the Group will continue its intensive efforts with the FDA will then be shown confirmation that this level has been improvements to the quality system in the coming years. maintained. The Decree encompasses the manufacturing units in The total costs for the improvement activities since 2014 Hudson, New Hampshire and Wayne, New Jersey in the US, as well amount to SEK 1,495 M of which SEK 995 M were reserved in as Rastatt and Hechingen in Germany, under which the FDA will 2014. An additional SEK 400 M was reserved in the autumn 2016 monitor developments for a certain period of time, for example, by for improvement activities. In addition, to this the financial con- performing third-party inspections of the production units under sequences for loss of revenue are estimated to SEK 130 M on the Decree. Getinge’s operating profit in 2016.
A global quality function Since 2013, Getinge has increased its focus on enhancing the level of the quality management system. During 2015, efforts in quality and regulatory compliance intensified, with the establishment of a » Extensive internal work new global function, reporting directly to the CEO. began immediately to In 2016, a new system for quality, environmental and operational control was launched called GetAligned that gathers documenta- strengthen the quality tion and shared processes for the Group. During the autumn a new governance and organization model was introduced for the units management system. «
16 GETINGE ANNUAL REPORT 2016 Acute Care Therapies
GETINGE ANNUAL REPORT 2016 17 Acute Care Therapies
Life-saving support for newborn babies
The SERVO-n neonatal ventilator provides More comfortable breathing means reducing sedation and a vulnerable newborn babies with the breathing better chance of sleep. Improved comfort and reduced work on breathing may also allow the baby to focus energy on growth support they need, while at the same time and maturation of lungs and brain. protecting the lungs, brain and other develop- The technology behind the product is called NAVA, short for ing organs. The product is developed and Neurally Adjusted Ventilatory Assist, a unique approach to designed to help neonatal intensive-care units mechanical ventilation based on neural respiratory output. With NAVA, the electrical activity of the diaphragm (Edi) is captured, (NICU) create ideal environments for newborns fed to the ventilator and used to assist the patient’s breathing to breathe, sleep and grow. both in synchrony with and in proportion to the patient’s own efforts. Since the ventilator and the diaphragm are controlled by
18 GETINGE ANNUAL REPORT 2016 Acute Care Therapies
the same signal, coupling between the diaphragm and the SERVO ventilators are synchronized virtually simultaneously. » A unique approach to The uniqueness of this product lies in the combination of the mechanical ventilation ultimate physiological trigger with the Edi signal together with the SERVO gas modules that allows babies as small as 300 grams to based on neural respira- be ventilated. The NAVA technology works regardless of patient size and is tory output. « used in most of the SERVO ventilators to support all kinds of patient categories. Unique to Getinge, NAVA is available for both invasive and non-invasive ventilation, assuring effective patient-ventilator synchrony independent of patient interface.
GETINGE ANNUAL REPORT 2016 19 Acute Care Therapies
Photo: US Rowing
20 GETINGE ANNUAL REPORT 2016 Acute Care Therapies
Getinge paved the way for Paralympic success
When the American rower Blake Haxton finished in fourth place in the single sculls in the 2016 Rio Paralympics, his parents Steve and Heather paid an extraordinary tribute to Getinge: “Without your technology, our son wouldn’t be alive.”
Blake Haxton has a succesful rowing carrer. Photo: US Rowing
The story about how Getinge’s brand promise, Passion for life, helped pave the way for high school rower Blake Haxton’s inter- » I am amazed by what national career started in 2009 as an ordinary Saturday evening in suburban Columbus, Ohio. In the Haxton home, Blake com- people have been willing plained of a sore calf after a high school basketball game and to do for me. « then went to bed. However, what seemed to be a harmless sports injury quickly developed into something far more lethal: necrotizing fasciitis, more commonly known as flesh-eating disease. Within 72 hours, in a coma, 100 days in hospital and no less than 20 surgeries. Blake endured his first amputation and he would eventually lose After the ordeal, it took four years before Blake picked up his his left leg up to the hip and his right leg to above the knee. As the rowing career again. He returned to the boat to take up arms and infections spread, his heart, lungs, kidneys and liver began to shoulders singles sculls. Different from traditional leg-driven shut down. Doctors would not even put a percentage on Blake’s rowing, the Paralympic version requires athletes to have a differ- survival chances. ent type of balance and focus more on upper-body strength. “It was simply because they thought there was no hope,” Blake has quickly reached world class level by taking fourth recalls Dr. Michael Firstenberg, Assistant Professor of Surgery and fifth place at the last two world championships before finish- and Integrative Medicine at Northeast Ohio Medical University. ing fourth in Rio de Janeiro this year. Dr. Firstenberg, an adult cardiac surgeon, helped coordinate On land, the 25-year old has just completed his law school and manage the solutions that oxygenated Blake Haxton’s blood finals, with his eyes set on moving into the investment sphere. outside of the body after his multiple organ failure seven years ago. “I am amazed by what people have been willing to do for me,” A SERVO-i ventilator and a Quadrox-D (a temporary extra-cor- Blake says. “And believe it or not, I’m as healthy as a horse. I don’t poreal support technology, similar to currently available CARDIO- have a single prescription in my name. There could have been so HELP, the world’s smallest portable heart-lung support system), many complications from all I went through. Although I don’t have are two other Getinge technologies involved in bringing Blake my legs anymore, I have been told I have above average health.” back to life. In all, the young athlete endured more than a month
GETINGE ANNUAL REPORT 2016 21 Surgical Workflows
Efficient and secure hospital workflows
Surgical Workflows develops solutions for infection control, operating rooms and advanced IT systems for traceability and management of the flow of sterile equipment as well as for optimal use of resources. Getinge’s Life Science segment is also included in this business.
The Surgical Workflows offering includes equipment, consuma- Result 2016 bles and services for cleaning, disinfection and sterilization of Surgical Workflows’ net sales amounted to SEK 10.5 billion (10.9). instruments, as well as equipment for complete surgical work- The organic order intake and net sales decreased by 3.1% and 3.4% places. The products promote efficient and secure hospital work- during the year. flows. The Gross margin decreased by 1.1 percentage points to 37.7% The IT solutions contribute to optimized patient and workflows, (38.8%), as a consequence of lower sales. minimized risks and create better compliance. In turn, this offers Operating expenses decreased by 10.5%, mainly due to the effi- greater patient safety and efficient utilization of resources, staff ciency program, Big 5. The savings helped to increase EBITA and equipment. before restructuring, acquisition and integration costs by 4.1% to In addition, the offering includes products and solutions for the approximately SEK 1.3 billion (1.2). Life Science segment. A comprehensive range of products and full project planning is offered in this segment through customized solutions for contamination prevention operations.
Important events 2016 Focus 2017
Merge of former Surgical Workplaces and Infection Control Strengthen the offering of integrated solutions further to become Surgical Workflows in areas where Getinge has strong presence, to meet customer need for higher quality and cost efficiency Major releases in several different product segments, such as the mobile operating table, MEERA, and Volista, which Product launches and R&D in order to capture long comprises world-leading surgical light technology. term organic growth
Launch of distribution of TSO3’s unique low-temperature Continued efficiency enhancements in line with the sterilizer in the US Big 5 program
22 GETINGE ANNUAL REPORT 2016 Surgical WorkflowsAVSNITT
Product Segments Surgical Workplaces Infection Control Life Science Integrated Workflowsolutions
Getinge’s position Among the global leaders in all product segments.
Peers and competitors Belimed, Dräger, Hill-Rom, Miele, Steris, Stryker.*
Examples of solutions and global market positions*
Infection Enabling Integrated Workflow Solutions Service & Prevention Surgery Consumables Patient OR Sterile Cleaning, disinfection Operating Room (OR) tables flow integration supply Service and disposables and sterilization and lights and ceiling service management management units for an improved work- ing environment
1 1, 3 ** 1 *** 5 1 1
Sterilizers Washers Isolation Sterile Transfer Sterilizers for drug and medical Washers for laboratory and vivar- Equipment for protecting drugs Transfer containers and device companies, products that ium applications and cGMP or humans from the surrounding isolators. suits both research and production washers for drug manufacturers environment 1 2 2 1
* Getinge research. ** 1 in OR tables and lights, 3 in ceiling service units. *** Only available in Denmark to date.
Rubrik Rubrik Share of Group sales Sales per market area NetRubrik Sales and EBITA margin****
MSEK %
12,000 20 Net Sales Surgical EMEA, 50% 10,000 16 Workflows, 35% APAC, 23% 8,000 EBITA margin 12 Americas, 27% 6,000 8 4,000
2,000 4
0 0 15 16
**** EBITA margin before restructuring, acquisition and integration cost.
GETINGE ANNUAL REPORT 2016 23 Surgical Workflows
Higher clinical quality, productivity and cost-efficiency
Getinge’s Integrated Workflow Solutions focuses on enhancing the clinical quality, patient safety and efficiency by utilizing workflow and logistic information-based systems. Furthermore, they contribute to a betterworking environment, with benefits for both healthcare staff and patients.
With Integrated Workflow Solutions, part of the ful work environment, disturbances and Surgical Workflows’ offering, Getinge brings time-wasting and resources that otherwise together a portfolio of excellent IT solutions . could have been used for treating patients. This includes the INSIGHT Patient Flow Manage- The benefits from the TEGRIS Operation Room ment System, the TEGRIS Operation Room Inte- Integration (ORI) System are just as clear. It gration System, and the T-DOC Sterile Supply delivers full control over the information and Management System, as well as several other equipment in the operating room, ensuring an solutions for specific markets around the world. efficient workflow in surgery and thereby also optimizing patient safety and medical quality. There are proven effects in terms of reduced » Hospitals strive to reach errors, reduced risk of infection due to less equipment being needed in the theater, as well higher quality, productivity as higher productivity and cost efficiency. The T-DOC Sterile Supply Management Sys- and cost-effiency. « tem is a best-in-class sterile and supply manage- ment solution, providing complete traceability of The long-term prospects are positive for Inte- surgical instruments and endoscopes, all the grated Workflow Solutions, as hospitals strive to way to the patient. This leads to a higher level of boost higher quality, productivity and cost effi- patient safety, efficiency and control – ensuring ciency. that all equipment is available at the right place, An independent study funded by the Danish at the right time, at the right cost and with the Welfare Technology Foundation showed that right quality. productivity enhancement, in terms of patient Getinge is currently delivering the largest pro- throughput, increased by 19% in the emergency ject in this business area in the world so far, to department at the regional hospital of Horsens, hospitals in the capital region of Copenhagen, Denmark, thanks to Getinge’s INSIGHT solution Denmark. The installation includes two major for secure and efficient clinical logistics. sterile supply units servicing eight hospitals with Another survey, performed by the central region 220 operating theaters, performing over 600 sur- of Denmark, revealed outcomes with 15% higher geries. This is done with using a never-before utilization of operating rooms and a 66% reduc- seen level of automation using robot technology tion in the number of canceled operations – and self-driving vehicles, all managed by T-DOC. which is a common problem leading to a stress-
24 GETINGE ANNUAL REPORT 2016 Surgical Workflows
GETINGE ANNUAL REPORT 2016 25 Patient & Post-Acute Care
Improving lives for people with reduced mobility
Patient & Post-Acute Care offers solutions that improve the lives of people affected by reduced mobility and wellness challenges. This is achieved by providing integrated solutions for both acute and long-term healthcare settings.
Patient & Post-Acute Care is well positioned in a global market Result 2016 with recurring revenue and underlying growth driven by an age- The net sales for Patient & Post-Acute Care amounted to SEK 7.5 ing population and increase of chronical diseases. billion (7.8). The organic order intake and organic net sales growth The product portfolio consists of several products and solu- declined by 3.4% and 3.0%. However, in the fourth quarter the tions, creating a strong position in relation to competitors. The business showed positive growth in organic order intake. solutions help improve patient and resident outcomes while The gross margin declined by 0.6 percentage points to 44.6% increasing healthcare practitioner safety and productivity. The (45.2%) during the year. The operating expenses decreased by 9.2% offering encompasses a broad number of products and solutions during, where cost control contributed to significant declines of for Safe Patient Handling, Prevention of Venous Thromboembo- both selling and administrative expenses, primarily related to lism, Medical Beds, Critical Care Units, Early Mobility, Hygiene measures implemented as part of the ongoing corporate transfor- Systems, Bariatric Care and Pressure Injury Prevention. mation program. This contributed to EBITA before restructuring, acquisition and integration costs increasing by 7.5% to approxi- mately SEK 1.0 billion (0.9).
Important activities 2016 Focus 2017 Getinge Executive Management Team was tasked by the Board to Preparation of a proposal of a potential listing and distri- develop a proposal for a potential listing and distribution of Patient & bution of Patient & Post-Acute Care to shareholders. Post-Acute Care to shareholders. The proposal will be presented at Increased investment in product development to ensure an Extraordinary General Meeting in autumn of 2017. long-term organic growth. Acquisition of 1st Call Mobility Ltd, a UK specialist in the sale Continued efficiency enhancements in line with and rental of medical beds and mattresses for bariatric patients, and the Big 5 program. launch of Citadel™ Plus Bariatric Care System, a medical bed frame.
Efficiency enhancements in line with the Big 5 program.
26 GETINGE ANNUAL REPORT 2016 Patient & Post-AcuteAVSNITT Care
Product Segments Safe Patient Handling Hygiene Bariatric Care Critical Care Venous Thromboembolism Pressure Injury Prevention Medical Beds Diagnostics
Getinges position Global leader within Safe Patient Handling and Diagnos- tics and strong contender in the other segments, such as Pressure Injury Prevention.
Peers and competitors Hill-Rom, Joerns, Linet, Medtronic, Natus Medical, Paramount Beds, Stryker.*
Examples of solutions and global market positions*
Safe Patient Critical Diagnos- DVT Bariatric Pressure Medical Patient Hygiene Care tics Prevention Care Injury Pre- Beds Handling Bathing and Kinetic ther- Cardiovascu- Active com- Patient han- vention Acute care Patient lifts, showering apy systems, lar and pression sys- dling equip- Alternating and long- slide sheets, systems, prone posi- obstretic tems, pumps ment and and low pres- term care slings and chemicals tioning, inte- dopplers and and gar- medical sure sys- medical flites. and special- grated thera- blood flow ments. beds. tems. beds. ized liquids. peutic beds. diagnostics.
1 1 1 ** 1, 3 *** 2 3 3 5
* Getinge research. ** 1 in USA in Prone Positioning. *** 1 Cardiovascular and 3 in Obstretic.
Rubrik Rubrik Share of Group sales Sales per market area NetRubrik Sales and EBITA margin ****
MSEK %
12,000 20 Net Sales Patient & EMEA, 49% 10,000 16 Post-Acute Care, 25% APAC, 12% 8,000 EBITA margin 12 Americas, 39% 6,000 8 4,000
2,000 4
0 0 15 16
**** EBITA margin before restructuring, acquisition and integration cost.
GETINGE ANNUAL REPORT 2016 27 Patient & Post-Acute Care
28 GETINGE ANNUAL REPORT 2016 Patient & Post-Acute Care
A successful combination
The New Royal Adelaide Hospital project in Australia is a prime example of how Getinge can offer integrated, comprehensive solutions including consultancy, planning, design, products and installation.
Close cooperation and a clear focus on the customer has led to the most successful hospital development project ever for Getinge in Australia. When it officially opens in 2018, the New Royal Adelaide Hospital will be the most advanced hospital in the Southern Hemisphere. “Working with customers intimately from the early stages, and leveraging the Group’s capabilities through collaboration, under- pinned our success in securing our largest ever win, and gave our competitors no chance to match the solution offered,” says Michael Luxton, President of Getinge Australia and New Zealand. “What works for us is good product knowledge in front of the customer and taking care of sales and service relationships. Cus- tomer see a holistic view of the way we run our business, and that makes them feel comfortable,” continues Michael. In addition to the major capital purchases throughout the hos- pital, the order includes consumables and service which gener- Getinge delivers products to the advanced ate recurring revenue for the business. New Royal Adelaide Hospital which will open in 2018. Under the contract, Getinge will have at least one full-time engineer on site at the hospital to provide service and on-the- spot customer care.
» The new Royal Adelaide Hospital will be the most advanced hospital in the Southern Hemisphere. «
GETINGE ANNUAL REPORT 2016 29 SUSTAINABILITY
Global responsibility for sustainable development
As a global manufacturer of medical devices and services, Getinge has operations in many locations across the world, and its employees represent a variety of cul- tures and backgrounds. With this comes responsibility – both locally and globally.
Getinge feels a considerable sense of responsibility to contribute to sustainable development in terms of both lower environmental impact from production and finished Getinge’s Code of Conduct products, as well as social responsibility in the markets in Getinge’s Code of Conduct stipulates how the company does which the company operates. business and describes the company’s and employees’ Getinge’s sustainability efforts also aim to ensure the responsibilities to stakeholders. The Code of Conduct long-term earnings capacity and strengthen the compa- expresses how the company and its employees must con- ny’s competitiveness. The sustainability efforts have a duct operations in a sustainable manner pursuant to ethical favorable impact on the Group’s ability to attract and principles and in accordance with the applicable laws and retain both customers and employees, which is crucial for regulations. All employees are to follow the values and prin- the continued development of Getinge. ciples set out in the Code of Conduct, and everyone is Quarterly environmental reporting from the Group’s responsible for personifying Getinge’s responsibilities in the production units provides good opportunities for fol- day-to-day operations. In 2016, a revised version of the Code low-ups and comprises the basis for decisions concerning of Conduct, in accordance with the Group’s values and environmental goals and activities in the environmental updated policies, was launched. area. Getinge has signed the UN’s Global Compact and The Code of Conduct is based on the following supports the ten principles on human rights, labor, envi- international principles: ronment and anti-corruption. In addition, Getinge’s The UN Universal Declaration of Human Rights sustainability work is governed by the Group’s Code of The UN Global Compact Conduct and a number of policies on, for example, the The ILO Declaration on Fundamental Principles environment and anti-corruption. and Rights at Work During the year, work began on defining the issues that are the most essential for Getinge to work in the future, OECD’s guidelines for multinational companies aided by a materiality analysis. This analysis, in conjunc- tion with in-depth dialog with stakeholders, will be the Whistleblowing policy foundation on which the Group will continue its efforts in The Group has begun the process of implementing a global sustainable development. whistle-blowing system under which employees have the A global organization for Ethics & Compliance was opportunity to report any improprieties or deviations from established during the year. To support this work, there the Code of Conduct. is also a global Compliance Committee, which will con- Supplier Code of Conduct tribute to ensuring that laws and regulations, as well as In addition, a Code of Conduct for suppliers has also been ethical guidelines are followed throughout the company. compiled, which will be implemented during the coming year. Next year, regional committees will be added to the organization, in order to increase focus on specific Anti-corruption policy Getinge has a global policy for anti-corruption to group geo graphical areas. together the company’s shared standpoints in this area.
30 GETINGE ANNUAL REPORT 2016 SUSTAINABILITY
Shareholder value
Customers Employees
Investments in emerging markets
Value creation for stakeholders
Shareholder value salaries and remuneration that exceed minimum Getinge creates value for its shareholders through levels and according to practice in all countries. annual dividend payments and the share’s long- Under the Group’s policy, no minors are employed. term development. The dividend policy states that In 2016, salary costs and other remuneration future dividends will be adjusted in line with amounted to SEK 8,198 million (8,122). In many Getinge’s profit level, financial position and future countries, the Group’s employees are covered by development opportunities. The aim is for the divi- defined-contribution pension plans, primarily dend to the company’s shareholders, as a return on retirement pensions. The premiums are paid con- capital invested, to correspond to 30–50% of net tinuously throughout the year by each Group com- profit. The remaining portion is reinvested in the pany to separate legal entities, such as insurance company. For 2016, the proposed dividend is SEK companies. Certain employees pay a portion of 2.00 (2.80) per share, which is 40% of the net profit. the premium themselves. The size of the premium paid, by the employees and Getinge, is normally Customers based on a set proportion of the employee’s salary. Getinge Group’s customers are found in the health- In 2016, the total net cost for pensions amounted care sector. Through its operations, Getinge con- to SEK 490 million (504). For further information tributes to enhancing care and making it more effi- regarding the Group’s pension commitments, see cient, which ultimately leads to the release of Note 22 of the consolidated financial statements. resources for additional care production. The Group has long been a major player in the Euro- Investments in emerging markets pean healthcare market. The expansion of recent In recent years, Getinge has completed a number years means that Getinge’s customers are cur- of investments in production facilities and sales rently found in all corners of the world. companies in several emerging markets. New plants have been established in, for example, China Employees and Poland. Accordingly, new employment oppor- Over the past 20 years, Getinge has grown from tunities have been created, and Getinge endeav- approximately 900 employees to more than 15,500 ors to ensure adjustments to favorable working employees. The Group values healthy relationships conditions for employees in these countries. with trade unions throughout the world and pays
GETINGE ANNUAL REPORT 2016 31 BUSINESS ETHICS
Business ethics and social responsibility
Getinge places high demands on all its operations in terms of health, safety, discrimination and ethics, regardless of where in the world operations are conducted.
In many of the countries where Getinge is active, health and together the company’s shared standpoints in this area. The safety in the workplace is regulated by stringent national legisla- policy is based on Getinge’s shared values and aims to ensure tion. However, the Group is also active in countries where this leg- ethical behavior in all business. islation is significantly weaker. Nonetheless, the Group places Gifts, corporate representation, compensation and personal high demands on all its operations in terms of health, safety, dis- benefits may only be offered to outside parties if they are of minor crimination and ethics regardless of where in the world operations value and associated with the prevailing norms. No gifts, corpo- are conducted. rate representation or personal benefits may be given if they con- During the year Getinge launched a revised Code of Conduct, travene the applicable legislation or prevailing norms. When which is the foundation for all operations and it describes how the Getinge’s policy contains stricter requirements than current company and employees are to act in relation to each other and practice or applicable legislation, then the Group’s policy takes other stakeholders. A number of global policies support the Code precedence. and are supplemented with local policies where necessary. Gifts that do not meet these requirements must be reported To ensure that the Group’s Code of Conduct is also upheld in the to management, which will determine what action is to be taken. supply chain, in 2012, the Group decided that all supplier agree- Getinge’s employees are not permitted to strive for or accept gifts ments must be supplemented with an agreement under which the or benefits that can be presumed to impact their business deci- supplier pledges to comply with the requirements in Getinge’s sions. Gifts that can be presumed to impact business decisions Code of Conduct, which is an ongoing process. In addition, a Code must be reported to the company’s management, which will of Conduct for suppliers has been compiled during 2016, which will decide how the matter is to be handled. be implemented over the coming years. Combating corruption is highly important to Getinge. In addi- For operations in countries with weaker legislation, the compa- tion to global anti-corruption and whistle-blowing policies, there ny’s Code of Conduct and policies are of the utmost importance are local additions (appendices) relating to specific legislation in and govern activities in the absence of legislation. In recent years, various countries, wherever applicable. Getinge has also set up a Getinge has worked on extended risk analyses of high-risk coun- whistle-blowing hot line, a telephone number to which employees tries, which has resulted in more extensive efforts, for example in can call around-the-clock to report on events that cannot be the form of training, in identified high-risk countries. reported according to internal procedures for various reasons. Getinge strives to make a positive and sustainable contribution During the year, the Code of Conduct, the anti-corruption pol- to the communities in which the Group is active. Such efforts pri- icy and the whistle-blowing system continued to be rolled out marily take the form of projects linked to the company’s operations. across the company, by means of an extensive training program, for which global trainers have been appointed, who then in turn Anti-corruption instruct the rest of the organization. Using tools such as dilemma Ethics and morals are the basis of all of the company’s operations scenarios, information videos and online tests helps ensure and are reflected in all relationships, both internally and exter- employees’ understanding of the content of these policies, as nally. A global anti-corruption policy has been adopted to group well as regulatory compliance.
32 GETINGE ANNUAL REPORT 2016 BUSINESS ETHICS
GETINGE ÅRSREDOVISNING 2016 33 ENVIRONMENT
Focus on reduced environmental impact
Getinge contributes to a sustainable society through active work in the environment. The aim is to reduce the environmental impact of products over their entire life cycle.
All manufacturing units will implement and certify management and electricity, quantities of waste and recycling as well as emis- systems that meet the ISO 14001 standard. New operations must sions of solvents. The reporting is integrated with the Group’s have certified management systems in place within two years of financial reporting and enables excellent opportunities to follow being acquired or established. This ensures structured environ- up the progress of the work with the Group’s environmental goals. mental efforts through requirements for follow-up of the environ- The information is regularly updated on the Group’s intranet. mental impact of own operations and the preparation of goals, Getinge also reports annually to the Carbon Disclosure Project actions and procedures for significant areas. (CDP), for which continuous improvements have been made in The aim for 2017 is to ensure that all major production sites, recent years. except the ones included in the agreement with the FDA, are cer- tified according to ISO 14001. To support this, global routines con- Energy and climate cerning environmental management were approved during 2016, Reducing the climate impact of the operations constitutes a key and will now be implemented. element of environmental efforts. The Group has a number of tar-
Goals and actions are focused on the elements that comprise gets to reduce CO2 emissions and energy consumption. During the most significant environmental impact for each facility. Regu- the year both energy consumption and CO2 emissions have con- lar external and internal audits ensure that the management sys- tinued to decrease, partly as a result of optimization of lighting tem develops continuously and contributes to an effective envi- and conversion to green electricity and biogas at several facilities. ronmental effort. A summary of the Group’s certifications can be found on page 96. Getinge’s environmental goals include greater Energy-efficiency enhancements responsibility in the areas of energy, climate and waste and are Efforts to enhance energy efficiency continued during the year, based on the analysis of the most important environmental for example, by continuing to upgrade lighting and heating in aspects that are carried out at each production facility. manufacturing and warehouse premises. In order to decrease the company’s energy consumption further, the work with energy Quarterly environmental reporting audits at the Swedish and Polish production units will continue. The Group’s production facilities prepare quarterly reports on Based on these, and the previously conducted audits in Germany their environmental performance regarding consumption of fuel and France, further reductions will hopefully be achieved.
Quantity of hazardous waste, kg per Total production-related Hazardous waste Vehicles CO emission TotalSEK productionM of internal sales. energy Line= use Target 2 –10% 2018 with 2015 as base year. CO2 emissions
3.0 60 170 10 2.5 50 150 8 2.0 40 130 6 1.5 30 1.0 20 110 4 0.5 10 90 2 0 0 70 0 12 13 14 15 16 12 13 14 15 16 16 15 16
Direct and indirect emissions, tons per QuantityNeoomsäning of hazardous waste, kg per Neoomsäning Energy consumption in production, Neoomsäning CO2 emission g/km for company SEK M of internal sales. SEK M of internal sales. vehicles (excluding trucks). MWh per SEK M of internal sales. EBITA-marginal EBITA-marginal EBITA-marginal Target: –5% in 2018 with 2015 as Target: –10% 2018 with 2015 as Target: –10% in 2018 with 2015 CO2 emission g/km for vehicles base year. base year. acquired that year. as base year.
Target: –10% in 2020 with 2016 as base
year for CO2 emission of all vehicles.
34 GETINGE ANNUAL REPORT 2016 ENVIRONMENT
Indirect emissions from electricity use Sustainable product development To further reduce the Group’s climate impact, several production A major part of Getinge’s development efforts are carried out facilities only use green electricity. Other facilities have the ambition pursuant to the EcoDesign principles, which allows the provi- to actively choose suppliers with a favorable electricity production sion of products and services for a more sustainable society. mix. In combination with rationalisations in the production, this has During all the product development phases, from feasibility made it possible to decrease indirect emissions in a number of coun- studies to implementation, the project team involved must tries. A challenge for Getinge is that in many cases the production determine the product’s environmental performance. facilities are in countries in which is it difficult to find suitable elec- The environmental impact over the entire product life cycle tricity suppliers. Traditionally, emerging markets have higher emis- is taken into account during development. Environmental sions from electricity generation, which means that emissions in aspects are included when selecting materials and other input these markets rise with increased production. To improve this situa- components, on choosing manufacturing methods and during tion, Getinge is striving as far as possible, to identify other ways of design to ensure low resource consumption. In addition, reducing emissions, for example, by solutions to use solar energy or within the framework of EcoDesign efforts, guarantees are in encouraging local electricity suppliers to reduce emissions from place to ensure that prohibited substances are not used and their electricity production. that the use of environmentally hazardous substances in products and in manufacturing is minimized. Transportation A key component of Getinge’s climate endeavors relates to emis- sions from transportation. This applies to transportation with the Group’s own vehicles, such as service visits, and to freight transpor- tation. Getinge’s car policy imposes far-reaching demands on CO2 emissions, which has started to show a postivite impact. In 2016, a system for reporting CO2 emissions from the main part of the (leased) vehicle fleet has been established. The reporting and fol- low-up is done partly as average emissions of g/ CO2 per 100 km for cars, and partly as estimated total emissions based on reported or estimated mileage. Getinge’s CO2 emissions from air travel decreased by 6% in 2016 compared to the year before. Together with the main supplier of freight transports, Getinge has chosen a system for reporting future CO2 emissions from these transports. Today, only a small part of Getinge’s freight transports are included in this, but this is expected to increase in 2017.
Waste and recycling Methodical work has resulted in the proportion of waste being sent to recycling gradually increasing year-by-year. This year the amount of hazardous waste has decreased while the amount of recycled waste was unchanged compared to 2015. Optimization of raw materials for production is part of the develop- ment process, and is further enhanced through EcoDesign. In 2016, a few new opportunities for further optimization have been identified, and will be further investigated. Environmental goals
Energy and climate
Reduce CO2 emissions from production by 5% by 2018, with 2015 as the base year.
Recycling, % Reduce energy consumption in production by 10% by 2018, with 2015 as the base year. Getinge’s environmental goals 100 include energy, climate and Reduce CO emissions from company vehicles 80 2 waste. They are based on the by 10% by 2020, with 2016 as the base year. 60 analysis of the most important 40 environmental aspects that is 20 Waste carried out at each production 0 facility. Reduce the amount of hazardous waste in produc- 12 13 14 15 16 tion by 10% by 2018, with 2015 as the base year. Waste to material or energy recycling, %. Neoomsäning All non-hazardous waste from production Target: all waste shall be recycled. EBITA-marginal is to be recycled.
GETINGE ANNUAL REPORT 2016 35 VALUES AND CULTURE
Shared values
Getinge has a culture characterized by professionalism and entrepreneurship. The values are based on a strong sense of a shared commitment with people in mind.
It is important that shared values anchored throughout the organization permeate the oper- ations in order to realize the Group’s strategy and achieve the set targets. Getinge’s cultural core values combine Passion with Collaboration, Openness, Excellence and Ownership. These values are needed to meet future challenges and requirements and to grow in new markets, among new customer groups and through new business models. Possibly the strongest feedback from employees in the organization is the passion for their work and the company. For this reason, passion is at the very core of the values. A commitment to people is central to all Getinge’s operations and also to the core values. Getinge is an authority in the specialist field of medical devices and is committed to helping its customers save lives and guarantee excellent care. The strong culture, values with people in mind, and Getinge’s operational results attract employ- ees and contribute to the Group retaining the best talent in all specialist areas. During the year, Getinge’s approximately 90 cultural core values ambassadors have contin- ued to implement these values throughout the organization. Internal surveys show that these efforts have increased awareness of the values within the Group. Using this as a foundation, » Passion is the willingness to work is now continuing on putting the values into practice in order to further develop employees improve results for others. « as well as the company.
36 GETINGE ANNUAL REPORT 2016 VALUES AND CULTURE
Collaboration
Ownership Passion Openness
Excellence
The cultural core values combine passion with collaboration, open- ness, excellence and ownership.
Passion is the willingness to improve results for others agement level. Confidence is created throughout the organiza- Passion is central to Getinge’s core values. Employees of tion by being open to and providing feedback, thus fostering an Getinge truly care for customers and the patients that they environment of collaboration. serve. Our passion is rooted in a desire to improve the health and wellbeing of others. Getinge makes a natural contribution Excellence is an undertaking to ensure by offering products and services that save lives, and also the best products, employees and processes through its commitment to sustainability. Excellence is a cultural phenomenon based on leadership, men- torship, teamwork and processes that set the foundation for high Collaboration is about working together quality, best-in-class products and services. It is based on a joint to encourage positive results effort that cannot be achieved individually. Getinge welcomes Open communication and shared best practices enhance col- new ideas and encourages mentoring and coaching for new laboration. By sharing successful models, bridges are created employees. The Group invests in innovation, clinical evidence and between departments that unify internal work flows and reduce strong relationships with key opinion-makers to identify as yet the number of times that the wheel has to be reinvented. Col- unsatisfied clinical requirements. To earn customer confidence laboration-oriented and considerate feedback from colleagues as a market leader, Getinge must continuously strive to identify helps remove obstacles, enhances the efficiency of work and and invest in best practice in these areas. improves the outcome for customers and their patients. Ownership is a proactive effort for Openness is the foundation of a feedback culture making important decisions in which we listen to and respect each other’s A chain is only as strong as its weakest link. Getinge nurtures a contributions culture based on collaboration and openness. To succeed, every Getinge strives to establish a culture of openness and feedback individual must take ownership of important decisions. Personal in which we listen to and respect each other’s contributions. integrity, ethics and morale are important factors in all decisions The Group supports transparent and honest communication that we make. Assuming responsibility ensures the best results from everyone, from new employees to the very highest man- for our customers and builds a strong culture.
GETINGE ANNUAL REPORT 2016 37 EMPLOYEES
A changing organization
Shared values and a focus on shaping the new organization have become the foundation for Getinge’s continuous development during the year.
Getinge aims to be an attractive employer and offer a work envi- organization toward the Group’s long-term strategic HR goals. ronment that is based on collaboration, responsibility and trans- A significant measure in conjunction with the change process parency. All employees are to be treated equally and Getinge does was to ensure that everyone in the company has the required not accept any form of discrimination due to, for example, religion, information and knowledge about what the change process is age, ethnicity, national identity, gender, sexual orientation, politi- expected to lead to, in the form of actions and results for the cal view or similar. entire organization, but also for the individual work teams and During the year, focus was primarily directed to establishing the employees. In addition to detailed information on the intranet and new organization presented during the second half of 2015 and other standard communication channels, workshops were con- which was put into effect on January 1, 2016. In conjunction with ducted to address any questions, increase understanding of and this process, a continuous strategic review was conducted. In identify areas of improvement and solutions, in a structured and October 2016, this resulted in Getinge’s Board of Directors tasking efficient manner. management to prepare a potential proposal to an Extraordinary Change processes, such as those that Getinge is currently General Meeting to distribute Patient & Post-Acute Care to share- experiencing, usually entail that some managers and employees holders, with the aim of listing the company in the first quarter of chose to leave the company for various reasons. The objective is 2018. From past experience, structural and organizational to manage these situations in a professional and considerate changes bring challenges with them as regards creating a balance manner. During the year, several other key positions were filled between internal and external focus, similar to what Getinge is through internal recruitment and many employees were given the currently experiencing. One of the key elements of this process opportunity to grow with new and increased areas of responsibility. was to lead change efforts based on business strategy objectives and a focus on customers, toward both managers and employees. A safe work environment Part of the company’s long-term strategy is to increase harmo- Employee health and safety is of the utmost importance, and nization within the Group. Efforts in this area were initiated a safe and secure work environment is a priority. Considerable through strategic HR processes and investments in a new HR emphasis is placed on the employees’ well-being and Getinge system during the year. This system supports both short and must provide safe and sound work environments in line with long-term staff planning, but is also a crucial tool for steering the best practices.
Number of employees Number of employees Level of education Age structure per region Distribution per age group % 20,000 35 30 15,000 25 20 10,000 15
5,000 10 5 0 Americas, 59% Higher education, 44% 0 12 13 14 15 16 EMEA, 28% Upper-secondary school, 33% 20 31 41 51 61 APAC, 13% Compulsory school, 23% –30 –40 –50 –60 –70
38 GETINGE ANNUAL REPORT 2016 EMPLOYEES
The Group’s work on health and safety matters is based on Furthermore, managers are continuously trained in managing national legislation, international regulations and own require- change efforts and in the implementation of Getinge’s strategy, ments and policies. Getinge strives to offer a safe and non-dis- such as in the form of challenges and opportunities associated criminatory work environment for the company’s employees with the prioritized activities established for achieving the targets. worldwide and conducts a continuous, long-term health and safety effort at all facilities. Equality and diversity Sickness absence during 2016 totaled 3.4% (2.9) for the entire Getinge endeavors to create a business with extensive overall company. The number of accidents per 100 employees increased expertise and a wide range of experience to create a dynamic during the year to 2.9 (2.5). No serious accidents were reported organization that can continue to advance the company in line during the year. with its strategic objectives. Accordingly, Getinge actively works on diversity issues, which are a key element of the Group’s Code of Recruitment and training Conduct. To continue to expand Getinge’s business at a fast pace, the Getinge has also had a policy for a number of years to ensure Group must attract, recruit, develop and retain employees with that all employees – regardless of gender, ethnicity, religion and the appropriate expertise and right values. The Group has thus other irrelevant contextual factors – are given equal opportunity pursued a long-term HR effort that supports the company’s stra- to develop and receive equal wages for equal work in due consid- tegic and financial goals. This includes structured succession eration of local conditions. planning that is reviewed annually. Diversity is becoming increasingly important to success in a Every year, a number of training courses are held for the Group’s global environment in which customers represent diversified executives, and customized training programs are offered at uni- groups from different cultures and ages, a factor that must be versity level for future leadership talents. These programs are reflected in our own management structures. Diversity is a key organized in close cooperation with some of the most distin- competitive advantage and the new management team will con- guished universities in the world. tinue to pursue this work in their respective functions.
Gender distribution, Gender distribution, Sickness absence Accidents general management in the Group per 100 employees % % %
100 100 5 5
80 80 4 4
60 60 3 3
40 40 2 2
20 20 1 1
0 0 0 0 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16 Men Women Men Women män kvinnor män kvinnor
GETINGE ANNUAL REPORT 2016 39 THE SHARE
The Getinge share
Getinge’s Class B share has been listed on Nasdaq Stockholm AB since 1993. The share is included in the Nasdaq Nordic Large Cap segment and the OMXS30 index. At December 31, 2016, the number of shareholders was 38,720 and the per- centage of foreign-owned shares amounted to 49.1% (48.7). Swedish institutional ownership was 19.7% (24.3), of which equity funds constituted 7.6% (8.1).
Share trend and liquidity Shareholder information At year-end, Getinge’s share was listed at SEK 146.10, which was a Financial information about Getinge is available on the Group’s decrease of 34.3% during the year. The highest price paid in 2016 website. Questions can also be put directly to the investor rela- was SEK 218.70 on January 4 and the lowest was SEK 136.90 on tions function of the company. Annual reports, interim reports December 2. At year-end, market capitalization amounted to and other information can be requested from the Group’s head SEK 34.8 billion, compared with SEK 53.0 billion at the end of the office by telephone, from the website or by e-mail. preceding year. The turnover of shares during the year totaled 173,080,592 (211,007,531). Lars Mattsson, Head of Investor Relations E-mail: [email protected] Share capital and ownership structure Tel: +46 (0) 10 335 00 43 At year-end 2016, share capital in Getinge totaled SEK 119,161,689 Website: getinge.com distributed among 238,323,377 shares. All shares carry the same dividend entitlement. One Class A share carries ten votes and one Shareholder value Class B share carries one vote. Getinge Group’s management works continuously to develop and improve the financial information relating to Getinge to provide Dividend policy current and future shareholders with favorable conditions to eval- The Board of Directors of Getinge has adopted a dividend policy uate the company in as fair a manner as possible. This includes entailing that future dividends will be adjusted in line with active participation at meetings with analysts, shareholders and Getinge’s profit level, financial position and future development the media. potential. The aim is for the dividend to correspond to 30–50% of net income. Analysts that monitor Getinge ABG Sundal Collier, Bank of America Merrill Lynch, Berenberg Bank, Carnegie, Danske Bank, DNB Markets, Handelsbanken, HSBC, Jefferies International Ltd, J.P. Morgan, Kepler Cheuvreux, Morgan Stanley, Nordea, Pareto Securities, SEB Enskilda and Swedbank.
Rubrik Rubrik Rubrik (enhet) (enhet) (enhet) Dividend per share, SEK Earnings per share, SEK Market Capitalization, SEK billion
6 12 60,000
4.5 9 45,000
3 6 30,000
1.5 3 15,000
0 0 0 12 13 14 15 16 12 13 14 15 16 12 13 14 15 16
40 GETINGE ANNUAL REPORT 2016 THE SHARE
Price- and volume trend 2016 Price- and volume trend 2012–2016
SEK Traded volume (thousands) SEK 250 40,000 450
225 35,000 400 350 200 30,000 300 175 25,000 250 150 20,000 200 125 15,000 150 100 10,000 100 75 5,000 50 50 0 0 Jan Feb Mar Apr Maj Jun Jul Aug Sep Okt Nov Dec 2012 2013 2014 2015 2016 Getinge B Traded volume (thousands) Getinge B OMX Stockholm_PI Getinge B Total Return Source: Six SIXRX Total Return Index Source: Six
Share data Getinge’s major shareholders at December 31 2016 2012 2013 2014 2015 2016 Class A Class B % of % of shares shares capital votes Amounts in SEK per share unless otherwise stated Carl Bennet AB 15,940,050 27,153,848 18.1 48.9 Earnings per share aft er tax 10.58 9.59 6.01 5.83 4.98 Franklin Templeton 20,752,171 8.7 5.4 Market price at December 31 220.00 220.00 177.80 222.50 146.1 Invesco 12,101,465 5.1 3.2 Cash fl ow 11.45 10.66 10.61 10.12 11.92 ADIA 9,418,867 4.0 2.5 Dividend 4.15 4.15 2.80 2.80 2.00* Fjärde AP-fonden 7,773,796 3.3 2.0 Dividend growth, % 10.67 0.00 –32.50 0.00 –28.6 Första AP-fonden 5,084,509 2.1 1.3 Dividend yield, % 1.89 1.89 1.57 1.26 1.37 Vanguard 4,104,881 1.7 1.1 Price/earnings ratio 20.79 22.94 29.58 38.16 29.34 Nordea funds 4,027,946 1.7 1.1 Dividend as profi t percentage, % 39.22 43.27 46.59 48.03 40.15 Folksam 4,021,743 1.7 1.1 Shareholders’ equity 63.66 69.58 78.45 82.21 87.76 Black Rock 3,873,030 1.6 1.0 Average number of shares (million) 238.3 238.3 238.3 238.3 238.3 Number of shares, December 31, Other 124,071,071 52.0 32.4 (million) 238.3 238.3 238.3 238.3 238.3 Total 15,940,050 222,383,327 100.0 100.0
*Proposed dividend for the fi nancial year 2016. The table shows the largest identifi ed shareholders in terms of capital ranked by number of votes. There may be major individual shareholders who are listed in the Development of share capital share registry and included among other shareholders. Number of shares Share capital aft er Transaction aft er transaction transaction, SEK Share capital distribution 1990 Formation 500 50,000 1992 Split 50:1, par value SEK 100 25,000 50,000 Class A Class B Total to SEK 2.0 No. of shares 15,940,050 222,383,327 238,323,377 1992 Private placement 5,088,400 10,176,800 No. of votes 159,400,500 222,383,327 381,783,827 1993 Private placement 6,928,400 13,856,800 % of capital 6,7 93,3 100 1995 Non-cash issue 15,140,544 30,281,088 % of votes 41,8 58,2 100 1996 Bonus issue 2:1 45,421,632 90,843,264 2001 New issue 1:9 at SEK 100 50,468,480 100,936,960 2003 Split 4:1, par value SEK 2 201,873,920 100,936,960 Five largest countries - capital, % to SEK 0.50 Sweden 50.9 2008 New issue 1:16 at SEK 120 214,491,040 107,245,520 USA 20.2 2009 New issue 1:9 at SEK 83.5 238,323,377 119,161,689 UK 14.1 United Arab Emirates 4.0 Ownership structure 2016 Luxembourg 3.0 Share- Share- Shares Capital % Votes % holder holder % Ownership by category - capital, % 1–100 0.3 0.2 13,165 34.0 101–200 0.4 0.2 5,618 14.4 Swedish owners 50.9 201–500 1.2 0.8 8,157 21.1 Foreign owners 49.1 501–1,000 1.8 1.1 5,262 13.6 1,001–2,000 1.9 1.2 3,124 8.1 Swedish individuals 10.5 2,001–5,000 2.8 1.7 2,059 5.3 Swedish institutions 12.1 5,001–10,000 1.9 1.2 611 1.6 Swedish mutual funds 7.6 10,001–20,000 1.7 1.0 273 0.7 Swedish owners, other 20.7 20,001–50,000 2.5 1.6 190 0.5 50,001–100,000 2.5 1.6 81 0.2 Foreign institutions 7.0 100,001–500,000 10.7 6.7 114 0.3 Foreign mutual funds 28.2 500,001–2,000,000 20.6 12.9 49 0.2 Foreign owners, other 13.9 2,000,001–5,000,000 12.5 7.8 10 0.0 5,000,001–10,000,000 16.8 10.5 5 0.0 10,000,001–20,000,000 4.3 2.7 1 0.0 20,000,001– 18.1 48.8 1 0.0 Total 100.0 100.0 38,720 100.0
GETINGE ANNUAL REPORT 2016 41 ADMINISTRATION REPORT
Administration Report
Operation and structure Tied-up capital. Inventories amounted to during the year to make a change to the Getinge is a global company with opera- SEK 5,431 M (5,409) and accounts receiv- position of President of Getinge, which tions in 44 countries and proprietary pro- able to SEK 8,159 M (7,470). meant that Getinge’s President and CEO duction in 11 countries. The pace of The average consolidated working capi- Alex Myers left his position and stepped change and growth since the stock- tal was SEK 43,383 M (40,771). Return on down from the Board in August. The Board market listing has been high. Every day, working capital was 8.3% (8.6). Goodwill appointed Joacim Lindoff as Acting Presi- Getinge’s products contribute to saving totaled SEK 22,992 M (21,798) at the end of dent and CEO. In November, the Board of lives and ensuring excellent care. The the financial year. Getinge AB announced the appointment Group operates in the areas of surgery, of Mattias Perjos as President and CEO of intensive care, infection control, care Investments. Net investments in rental Getinge. Mattias currently joins Getinge ergonomics and wound care. equipment and other fixed assets from his position as CEO of Coesia Indus- amounted to SEK 991 M (1,352). Invest- trial Process Solutions (IPS) and Head of Organization. From January 1, 2016, Get- ments primarily pertained to production Coesia International. Mattias will take inge Group has been organized in three facilities, production tools and IT projects. office on March 27, 2017. business areas — Surgical Workflows, In the third quarter, Getinge Group Acute Care Therapies and Patient & Post- Financial position and equity/assets appointed Reinhard Mayer as the new CFO Acute Care. Approximately 75% of sales ratio. The Group’s net debt totaled SEK and Magnus Lundbäck as the new Execu- are conducted through the Group’s propri- 23,389 M (22,867), corresponding to a net tive Vice President Human Resources & etary sales companies and the remaining debt/equity ratio of 1.12 (1.17). Sharehold- Sustainability. 25% are sold by agents and distributors in ers’ equity at year-end amounted to SEK Reinhard Mayer succeeds Pernille Fabri- markets for which Getinge Group lacks 20,916 M (19,593), corresponding to an cius who left the Group in September. proprietary representation. Production is equity/assets ratio of 37.9% (36.8). Magnus Lundbäck succeeds Andreas conducted at a total of 26 facilities in Bra- Quist. During the year, Getinge Group also zil, the Dominican Republic, France, Can- Cash flow. Cash flow from operating activ- appointed Jens Viebke as the new Presi- ada, China, Poland, the UK, Sweden, Tur- ities amounted to SEK 3,671 M (3,458). The dent of Acute Care Therapies, which key, Germany and the US. cash conversion was 73.6% (66.7). means he also joins the Getinge Executive Team. Financial overview Shareholders’ equity. For information Revenues. Consolidated net sales regarding trading of shares in the com- Settlement in US litigation case. As previ- decreased 1.6% to SEK 29,756 M (30,235). pany, the number of shares, the classes of ously announced, the subsidiary Atrium Adjusted for corporate acquisitions, shares and the rights associated with Medical Corporation was involved in liti- divestments and exchange-rate fluctua- these in the company, see the Getinge gation regarding the sale and marketing of tions, net sales decreased 1.5%. Share section on pages 40–41. certain products. In August 2015, the court dismissed the relator’s claim and EBITA. EBITA before restructuring, acqui- Sales trend during the fourth quarter of 2015, the mag- sition and integration costs improved to In the year, net sales decreased 1.6% to istrate judge recommended dismissal of SEK 4,341 M (4,179). SEK 29,756 M (30,235). Net sales fell the relator’s remaining claims pertaining. organically by 1.5%. In 2016, Surgical Work- The parties agreed to a preliminary settle- Operating profit. The Group’s operating flows’ sales amounted to SEK 10,496 M ment of the remaining claims. Based on profit declined 16.2% to SEK 2,287 M (10,891). Sales fell organically by 3.4%. In this preliminary settlement, the Group’s (2,729), which corresponds to 7.7% (9.0) of Acute Care Therapies, sales amounted to fourth quarter of 2015 was charged an net sales. SEK 11,804 M (11,577), corresponding to an amount of about SEK 110 M. A settlement organic increase of 1.4%. In Patient & Post- in line with the preliminary agreement was Net financial items. Net financial items Acute Care, sales amounted to SEK 7,456 reached in the second quarter of 2016, amounted to an expense of SEK 637 M M (7,767), corresponding to organic resulting in no additional costs. The settle- (expense: 732), of which net interest items growth of negative 3.0%. The EMEA repre- ment does not constitute an admission comprised an expense of SEK 600 M sented the Group’s largest market, from any of the parties or an acknowledg- (expense: 696). accounting for 42% (43) of sales, followed ment that any of the parties’ claims are by the Americas at 40% (40). APAC unfounded. Profit before tax. The Group’s profit accounted for 18% (17) of sales. The hospi- before tax declined 17.4% to SEK 1,650 M tal segment accounted for 85% (84) of Restructuring activities — production (1,997), which corresponds to 5.5% (6.6) of sales. The elderly care sector comprised unit transfer completed. As previously net sales. 8% (8), while the life science industry rep- announced, Getinge decided to relocate resented 7% (8). the production conducted at the unit in Taxes. The Group’s total tax expense Rochester, New York, US to the production amounted to SEK 437 M (540), corre- Group-wide events during the year unit in Poznan, Poland. The relocation sponding to 26.5% (27.0) of profit before Changes to Getinge Executive Team. The was completed in the second quarter of tax (see Note 9). Board of Directors of Getinge AB decided 2016 and comprises part of the Group’s
42 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
efficiency-enhancement program, and is management development. The work is Environmental impact expected to generate annual savings of based on an analysis of the company’s The company’s environmental policy, the about SEK 45 M. needs for specialist and management established environmental goals and the competence and the company’s demo- international environmental standard ISO Acquired and divested operations graphic structure. In 2016, Getinge has 14001 form the basis of Getinge’s environ- AccuMed also continued long-term efforts to mental work. All manufacturing units will The acquisition of AccuMed was com- increase diversity. Getinge has a previ- implement and certify environmental pleted in April 2016. Through the acquisi- ously implemented policy to ensure that management systems that meet the ISO tion, Getinge obtains a manufacturing unit all employees — regardless of gender, eth- 14001 standard. For acquisitions, the man- for the production of medical textiles in nicity, creed and other irrelevant factors agement system is to be introduced and the Dominican Republic. The operations — are given equal opportunity to develop certified within 24 months. The manage- have about 400 employees and the total and receive equal pay for equal work. ment system ensures structured environ- purchase consideration amounted to SEK mental work and provides a basis for the 66 M. The goodwill arising in connection Remuneration to senior executives reporting of environmental performance with the acquisition amounted to SEK 29 The 2016 AGM established guidelines for that Getinge’s manufacturing units submit M and is attributable to future integration remuneration to senior executives, primar- every quarter. synergies for production. Acquisition ily entailing the following: Remuneration Through the targeted activities on envi- expenses of SEK 1.0 M were charged to and other employment terms and condi- ronmentally compatible product develop- earnings. tions for senior executives is to be mar- ment, EcoDesign, the aim is to reduce the ket-based and competitive in every market environmental impact from manufactur- 1st Call Mobility Limited where Getinge is active so as to attract, ing and product usage. Recycling of input All of the shares in the UK company 1st motivate and retain skilled and competent substances and components is also facili- Call Mobility Limited were acquired during employees. The total remuneration pack- tated. the second quarter. The company is spe- age to senior executives is to comprise One facilities in Sweden conducts oper- cialized in medical-device solutions for basic pay, variable remuneration, pension ations requiring permits or declaration bariatric patients, and generates sales of and other benefits. The allocation between under the Swedish Environmental Code. approximately SEK 100 M and has 48 basic pay and variable remuneration This facility holds the necessary permits. employees. The total purchase consider- should be proportionate to the executive’s Most of the impact on the environment ation amounted to SEK 233 M and the responsibility and authority. Variable comprises emissions to water and air, and goodwill arising in connection with the remuneration is limited to a maximum the environmental effects from energy acquisition amounted to SEK 133 M and is amount and linked to predetermined and consumption and waste production. The primarily attributable to geographical measurable criteria, designed with the aim operations were conducted in accordance spread. Acquisition expenses of SEK 1.6 M of promoting the company’s long-term with applicable permits and conditions were charged to earnings. value creation. No variable remuneration during the year. Further information con- will be paid if profit before tax is negative. cerning Getinge’s environmental work is Innovation and product development For the CEO, variable remuneration is lim- presented on pages 34–35. Innovation and product development are ited to a maximum of 80% of basic pay. a cornerstone of the Group’s strategy to Variable remuneration is based on the indi- Risk management strengthen the customer offering and vidual goals set by the Board. Examples of Healthcare reimbursement system. Politi- thereby ensure future organic growth. such goals include earnings, volume cal decisions represent the single greatest The Group uses innovation and product growth, working capital and cash flow. For market risk to Getinge. Changes to the renewal to manufacture products, sys- other senior executives, variable remuner- healthcare reimbursement system can tems and solutions with a documented ation is based on the outcome in the exec- have a major impact on individual markets ability to deliver excellent clinical results utive’s personal area of responsibility and by reducing or deferring grants. Since Get- and economic benefits. In 2016, the individually set targets. In addition to the inge is active in a large number of geo- Group’s research and development expen- aforementioned variable remuneration, graphical markets, the risk for the Group diture amounted to SEK 1,265 M (1,300). Of adopted share or share-related incentive as a whole is limited. this amount, SEK 594 M (702) was capital- programs may be included. The Board is ized as intangible assets, as it was entitled to deviate from these guidelines if Customers. Activities conducted by Get- deemed that these will generate future warranted in individual cases. Total remu- inge’s customers are generally financed financial benefits. neration to senior executives amounted to directly or indirectly by public funds. The SEK 146 M (82) in 2016. Refer to Note 27 for ability to pay is usually very solid, although Personnel further information. The Board proposes payment behavior can vary between dif- At December 31, 2016, there were 15,582 unchanged guidelines for remuneration to ferent countries. All transactions outside (15,424) employees, of whom 1,236 (1,271) senior executives to the 2017 AGM. the OECD area are covered by payment were employed in Sweden. In 2016, Get- guarantees, unless the customer’s ability inge continued its extensive efforts to to pay is well documented. strengthen the Group’s personnel and
GETINGE ANNUAL REPORT 2016 43 ADMINISTRATION REPORT
Authorities and control bodies. Parts of Protection of intellectual property. Currency: Getinge’s product range are covered by Getinge is a market leader in the areas in estimated Estimated Impact rate in net volume in in SEK M of 5% legislation stipulating rigorous assess- which it operates and invests significant 2017 2017, millions rate movement ments, quality control and documenta- amounts in product development. To JPY: 8.25 2,210 +/– 10 tion. It cannot be ruled out that Getinge’s secure returns on these investments, the EUR: 9.65 –10 +/– 5 operations, financial position and earnings Group actively upholds its rights and mon- GBP: 11.00 90 +/– 50 may be negatively impacted in the future itors competitors’ activities closely. If USD: 8.75 30 +/– 15 by difficulties in complying with current required, Getinge will protect its intellec- regulations and requirements of authori- tual property rights through legal pro- Sensitivity analysis. Getinge’s earnings ties and control bodies or changes to such cesses. are affected by a series of external factors. regulations and requirements. To limit The table below shows how changes to these risks to the greatest possible Financial risk management some of the key factors that are important extent, Getinge conducts extensive work Getinge is exposed to a number of finan- to Getinge could have affected the focused on quality and regulatory issues. cial risks in its operations. Financial risks Group’s profit before tax in 2016. Each business area has an appointed per- principally pertain to risks related to cur- son with overall responsibility for quality rency and interest-rate risks, as well as Change in profit before tax SEK M and regulatory matters (QRM). The major- credit risks. Risk management is regulated Price change +/– 1% +/– 298 ity of the Group’s production facilities are by the finance policy adopted by the certified according to the medical device Board. The ultimate responsibility for man- Cost of goods sold +/– 1% +/– 159 quality standard ISO 13485 and/or the gen- aging the Group’s financial risks and devel- Salary costs +/– 1% +/– 101 eral quality standard ISO 9001. oping methods and principles of financial Interest rates +/– 1 percent- +/– 66 age point risk management lies with the Getinge Research and development. Getinge’s Executive Team and the treasury function. The effect of a +/– 1 percentage point future growth also depends on the compa- The main financial risks to which the change in interest rates on the Group’s ny’s ability to develop new and successful Group is exposed are currency risks, inter- profit before tax was calculated based on products. Research and development est-rate risks and credit and counterparty the Group’s interest-bearing liabilities, efforts are costly and it is impossible to risks. For more detailed information con- excluding pension liabilities, at year-end guarantee that developed products will be cerning these risks, refer to Note 26 2016. The impact of a +/– 1 percentage commercially successful. As a means of “Financial risk management.” The Group point change in interest rates on equity is maximizing the return on research and has a number of participations in foreign about SEK 315 M. Consideration was given development efforts, the Group has a very operations whose net assets are exposed to the effect of the various risk manage- structured selection and planning process to currency risks. Currency exposure that ment measures that Getinge applies in to ensure that the company prioritizes arises from net assets in the Group’s for- accordance with its approved policy. correctly when choosing which potential eign operations is primarily managed by projects to pursue. This process com- borrowing in said foreign currency. Outlook prises thorough analysis of the market, Organic sales growth is deemed to be technical development and choice of pro- Currency. The effect of exchange-rate slightly positive in 2017. duction method and subcontractors. The movements on earnings and equity is cal- Currency transaction effects are actual development work is also con- culated using forecast volumes and earn- expected to have a positive impact of ducted in a structured manner and each ings in foreign currency, taking into con- approximately SEK 200 M on the Group’s project undergoes a number of fixed con- sideration currency hedging that has been 2017 earnings. trol points. conducted. In addition, there is the The financial consequences of the Con- exchange-rate impact on net financial sent Decree with the FDA, excluding recon- Product liability and damage claims. items related to interest expenses in for- struction costs, are related to loss of reve- Healthcare suppliers run a risk, like other eign currencies. Currency transaction nue and are expected to have a negative players in the healthcare industry, of being effects are expected to have a positive impact of approximately SEK 50 M on the subject to claims relating to product liabil- impact of approximately SEK 200 M on the Group’s 2017 operating profit. As previously ity and other legal claims. Such claims can Group’s 2017 earnings. For a rate move- mentioned, the Group is still awaiting the involve large amounts and significant legal ment of 5%, the impact on equity of a FDA’s decision on the action plan related to expenses. Getinge cannot provide any remeasurement of the Group’s portfolio of the production unit in Hechingen. The guarantees that its operations will not be currency derivatives held for hedging pur- financial consequences could be adjusted subject to compensation claims. A com- poses is about SEK 185 M. At a 5% rate in line with the final plan in the future. prehensive insurance program is in place movement, the impact of other translation to cover any property or liability risks (e.g. effects on equity is approximately SEK product liability) to which the Group is 1,185 M. Sensitivity to exchange-rate fluc- exposed. tuations on earnings is detailed in the fol- lowing table, based on the exchange rates specified in the table.
44 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
Corporate Governance Report
Getinge AB (publ) is a Swedish public lim- include Getinge AB’s Articles of Associa- Board members as well as the auditor’s ited liability company listed on Nasdaq tion, instructions and formal work plan for term of office Stockholm, Large Cap segment. Getinge the Board of Directors, Board committees • Adoption of the remuneration to applies the Swedish Corporate Gover- and CEO, various policies and guidelines Board members and auditor nance Code and hereby presents the as well and the Group’s Code of Conduct. • Reelection of all Board Members and Corporate Governance Report for 2016. The company’s Articles of Association are election of Johan Malmquist as a new available on the Group’s website: Board member Introduction www.getinge.com. • Reelection of Carl Bennet as Chairman Getinge Group is a global company in the of the Board medical device field with operations in 44 Shareholders • Reelection of Öhrlings Pricewater- countries and proprietary production in For information about shareholders and houseCoopers AB as auditor for Get- 11 countries. the Getinge share, see pages 40–41 inge until the conclusion of the 2017 The Group’s customers are found pri- and www.getinge.com. AGM marily in the healthcare, elderly care and • Guidelines for the remuneration to life science areas, and the Group’s prod- General Meeting of Shareholders senior executives ucts are often pivotal to the quality and Shareholders can exert their influence at • Establishment of the long-term share- efficiency of customers’ businesses. the Annual General Meeting (AGM) and, based incentive program, LTIP 2016, and Accordingly, confidence in Getinge and its when applicable, at an Extraordinary Gen- hedging activities in view of the pro- products is entirely decisive for continued eral Meeting, which are Getinge’s highest gram through amendments of the Arti- sales successes. decision-making bodies. cles of Association (entailing that the Corporate governance is aimed at All shareholders registered in the share- company shall be able to issue new con- ensuring the continued strong develop- holders’ register at a certain time before vertible and redeemable Class C shares ment of the company and, consequently, the Meeting and who have notified their with one (1) vote and not entitle to divi- that the Group fulfills its obligations to attendance to the Meeting before the time dends) and authorization for the Board shareholders, customers, employees, sup- given in the notice are entitled to partici- to resolve on a directed issue of Class C pliers, creditors and society. pate in the Meeting and exercise their vot- shares to a third party and the repur- Getinge’s corporate governance and ing rights in full. Shareholders who are not chase of such shares and transfer of internal regulations are consistently able to personally attend can be repre- Class B shares to the participants of the geared toward business objectives and sented by proxy. A shareholder who program strategies. The Group’s risks are well-ana- wishes to have a matter put forward at the lyzed and risk management is integrated General Meeting of Shareholders must Nomination Committee in the work of the Board and in operational submit a written proposal to the Board in a The Nomination Committee’s task is to put activities. timely manner so that the proposal can be forward proposals ahead of the AGM, Getinge’s organization is designed to be included in the notice of the AGM. regarding the election of the Chairman of able to react promptly to market changes. the AGM, the Chairman of the Board and Accordingly, operational decisions are 2016 Annual General Meeting other members of the Board, election of taken at a decentralized level, while over- The 2016 Annual General Meeting was auditors, as well as fees for Board mem- riding decisions concerning strategy and held on March 30 the Kongresshallen at bers and auditors. Pursuant to a resolu- direction are made by Getinge’s Board and Hotel Tylösand, in Halmstad, Sweden. A tion by Getinge AB’s 2005 AGM, the Nomi- the Getinge Executive Team. total of 1,005 shareholders, representing nation Committee comprises Getinge’s 61.3% of the number of shares and 75.9% Chairman and representatives of the five External and internal regulations of the total number of votes in the com- largest shareholders at August 31, 2016, as Getinge’s corporate governance is based on pany attended the AGM. Board Chairman well as a representative for minority Swedish legislation, as well as on the Swed- Carl Bennet was elected Chairman of the shareholders. Ahead of the 2017 AGM, this ish Corporate Governance Code (“the Meeting. All Board members elected by means that Getinge’s Nomination Com- Code”), Nasdaq Stockholm AB’s Rulebook the AGM were present. The minutes from mittee comprises: for Issuers and also the Swedish Securities the AGM are available at: www.getinge. • Carl Bennet, Carl Bennet AB Council’s opinions on good practice on the com. The decisions made by the AGM • Carina Lundberg Markow, Folksam Swedish stock market. This report summa- include: • Ossian Ekdahl, First Swedish National rizes how corporate governance is struc- Pension Fund tured and how it has been carried out and • Adoption of the income statements and • Per Colleen, Fourth Swedish National developed in the Group during the 2016 balance sheets presented for the Parent Pension Fund financial year. Getinge complies with the Company and the Group • Cecilia Marlow, Nordea and Code’s regulations and presents an expla- • Dividend in accordance with the • Viveka Ekberg, representing minority nation below for any deviation from the Board’s and the CEO’s proposal of SEK shareholders Code’s regulations in 2016. 2.80 per share for the 2015 financial year The internal steering documents relat- • Amendment to the Articles of Associa- The Nomination Committee conducts an ing to Getinge’s corporate governance tion regarding the highest number of evaluation of the Board and its work. A
GETINGE ANNUAL REPORT 2016 45 ADMINISTRATION REPORT
proposal for the new Board is subse- cles of Association, Getinge’s Board of The Board held its statutory meeting on quently drawn up by the Nomination Com- Directors is to comprise not fewer than March 30, 2016 and convened nine times mittee together with a proposal on remu- three and not more than nine members, during the year, with an average atten- neration to the Board of Directors and is with not more than nine deputy members. dance rate of 95% of the elected mem- submitted with the notice of the forth- The Board members are elected annually bers. At its scheduled meetings, the Board coming AGM. Shareholders who would like at the AGM to serve for the period up to addresses fixed agenda items in accor- to submit proposals to Getinge’s 2017 and including the next AGM. dance with the Board’s formal work plan, Nomination Committee, can contact the Employees have the right to appoint two including the business situation, budget, Nomination Committee by e-mail at representatives and two deputy members annual accounts and interim reports. The [email protected] or by mail: to the Board. In 2016, Getinge’s Board board has addressed as well comprehen- Getinge AB, Att: Nomination Committee, comprised nine members elected at the sive issues related to the economy and Box 8861, SE-402 72 Gothenburg, Sweden. AGM up until August when Alex Myers left associated cost issues, corporate acquisi- Chairman of the Board Carl Bennet was his position as CEO and Board member of tions and other investments, long-term appointed Chairman of the Nomination Getinge AB. Alex Myers was not replaced strategies, financial matters, and struc- Committee ahead of the 2017 AGM, which on the Board during the year. tural and organizational changes. deviates from the rules of the Code. The The Group’s President & CEO and CFO Carl Bennet was reelected Chairman of reason for this is the Chairman of the participate at the Board meetings, with the the Board at the 2016 AGM. The Chair- Board is very well suited to lead the Nomi- latter also serving as Secretary. Other senior man’s role is to lead and manage the nation Committee in an effective manner executives also participate when needed. Board’s work and to ensure that this is to achieve the best results for the compa- The work of the Board is governed mainly by conducted in an organized and efficient ny’s shareholders. the Swedish Companies Act, the Code and manner. It involves ensuring that the the Board’s formal work plan. The Board’s Board fulfills its responsibilities and moni- Board of Directors formal work plan is approved each year at tors the development of the company, and Primarily, the Board is responsible for the the statutory Board meeting. According to ensuring that the Board continuously organization of the company and the man- the current applicable formal work plan, the receives the information required for the agement of its affairs. In carrying out its Board will have approximately seven sched- Board to perform its work while maintain- duties, the Board must safeguard the uled meetings during the financial year. In ing the same level of quality in accordance interest of all its shareholders. It is also addition, the formal work plan will also with applicable regulations. The Chairman the Board’s duty and responsibility to determine the distribution of work and of the Board does not participate in the ensure that this Corporate Governance responsibility between the Board, the Chair- operational management of the company. Report is prepared. According to the Arti- man, Board committees and the CEO. According to the Code, the majority of
Board of Directors and Committees in 2016 Committees Attendance Remune Remune Year Auditing ration Board Auditing ration Board members elected by the AGM elected Dependent1 Committee Committee meetings Committee Committee Carl Bennet, Chairman 1989 ■ Chairman 9/9 3/3 Johan Bygge 2007 Chairman 8/9 5/5 Cecilia Daun Wennborg 2010 Member 9/9 5/5 Carola Lemne 2003 Member 8/9 5/5 Joacim Lindoff* 2016 ▲ 3/4 Johan Malmquist** 2016 ▲ Member 7/7 2/2 Alex Myers*** 2015 ▲ 4/4 Malin Persson 2014 Member 9/9 3/3 Johan Stern, Vice Chairman 2004 ● Member Member 9/9 5/5 3/3 Maths Wahlström 2012 Member 8/9 3/3 Board members appointed by employees Peter Jörmalm (deputy) 2012 8/9 Rickard Karlsson 2013 9/9 Åke Larsson 2014 9/9 Maria Grehagen-Hedberg (deputy member) 2014 8/9
1. As defined by the Swedish Corporate Governance Code * Joacim Lindoff participated in his capacity as Acting CEO from August. ■ Representative for Getinge’s principal owner Carl Bennet AB ** Johan Malmquist, former CEO, was elected member at the AGM held on ▲ President and CEO March 30 and participated at all subsequent Board meetings. ● Board member of Getinge’s principal owner Carl Bennet AB ***Alex Myers stepped down as CEO in August.
46 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
the elected Board members are to be inde- Remuneration Committee preparing questions concerning remuner- pendent in relation to the company and its In 2016, Getinge’s Remuneration Commit- ation principles and remuneration and management and at least two of these tee comprised Board members Carl Ben- other employment terms and conditions members are also to be independent in net (Chairman), Johan Stern, Maths Wahl- for the CEO and other members of the relation to the Group’s largest sharehold- ström, Malin Persson and Johan Getinge Executive Team. The Committee ers. The Nomination Committee believes Malmquist. Except for Johan Malmquist, also prepares proposals to the Board on that the Board’s composition in Getinge who is to be regarded as dependent in his the guidelines for the remuneration to meets the requirements for independent capacity as former CEO, all other mem- senior executives, which the Board sub- members as stipulated by the Code. The bers of the Remuneration Committee are mits for decision at General Meetings. In Nomination Committee has observed that to be regarded as independent in relation addition, the Committee follows and eval- Alex Myers (up until August), in his capac- to the company and the executive man- uates ongoing and completed variable ity as CEO, and Johan Malmquist, in his agement. The fact that Johan Malmquist remuneration programs for the Getinge capacity as former CEO, are to be is a member of the Remuneration Commit- Executive Team during the year and the regarded as dependent in relation to the tee even though he is not considered as application of the guidelines for remuner- company and executive management, and independent in relation to the company ation to senior executives resolved at the that Carl Bennet and Johan Stern, as rep- and the company’s management consti- AGM. resentatives and Board members of Get- tutes a deviation from the rules of the inge’s principal owner Carl Bennet AB, are Code. The reason for this deviation is that Auditing Committee to be regarded as dependent in relation to Johan Malmquist, having been the compa- In 2016, Getinge’s Auditing Committee the largest shareholders. Other Board ny’s CEO and board member for many comprised Board members Johan Bygge members are deemed to be independent years, is well acquainted with the compa- (Chairman), Cecilia Daun Wennborg, in relation to the company, executive man- ny’s conditions in terms of, amongst other Carola Lemne and Johan Stern. All mem- agement and the largest shareholders. things, employee situation, supply of com- bers of the Auditing Committee are inde- The Board members’ individual share- petence and remuneration structures. pendent in relation to the company, exec- holdings, their independence in relation to In 2016, the Committee held three min- utive management and the company’s the company, executive management and uted meetings, including informal contact largest shareholders, with the exception the largest shareholders as well as their when necessary. The attendance of mem- of Johan Stern, who is not considered to other assignments in other companies are bers at the Committee meetings are pre- be independent in relation to the compa- presented in the table on page 46 and in sented in the table on page 46. ny’s largest shareholders. In 2016, the the presentation of Board members on Following written instructions, the Committee held five minuted meetings, pages 50–51. Remuneration Committee’s duties include including informal contact when neces-
Board and Committee meetings in 2016
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Board of Directors 1 2 3 4 5 6 7 8 9
Auditing Committee ■ ■ ■ ■ ■
Remuneration Committee ■ ■ ■
Board meetings 1 Annual accounts 2 Annual General Meeting 3 Interim Report 4 Interim Report 5 Changes in management 6 Company visit and Review of operations 7 Interim Report 8 New President & CEO 9 Budget
GETINGE ANNUAL REPORT 2016 47 ADMINISTRATION REPORT
sary. The attendance of members at the and continuously consults and confers announced the appointment of Mattias Committee meetings are presented in the with the external auditors. Perjos as President & CEO. He will take table on page 46. office on March 27, 2017. It is the CEO’s The company’s auditors participated in External auditors responsibility to implement and ensure all meetings convened by the Auditing Getinge’s auditors are elected at the AGM. that the strategies, business plans and Committee. Jointly with the auditors, the The auditors will review the Annual report, operational objectives agreed on by the Committee discussed and established the financial statements and the consolidated Board are carried out. It is also the CEO’s scope of the audit. financial statements as well as the man- responsibility to keep the Board up to date The Auditing Committee is a standing agement by the Board and CEO in accor- with information and essential manage- committee in the contact between the dance with generally accepted auditing ment information, to submit reports at the Board and the auditors, and continuously standards. After every financial year an Board meetings while keeping the Board reports on its work to the Board. The auditor’s report is presented to the Parent and Chairman continually updated about Auditing Committee follows written Company and a Group auditor’s report is the Group’s and company’s financial posi- instructions and its activities are to meet presented to the General Meeting. At the tion and future development opportuni- the requirements of the Swedish Compa- 2016 AGM, the registered accounting firm ties. The CEO is supported by the Getinge nies Act and the EU Audit Regulation. The Öhrlings PricewaterhouseCoopers AB was Executive Team comprising presidents of Committee’s tasks include assisting the elected auditor with the authorized public the regions, Business Category Units, sup- Nomination Committee with preparing accountant Johan Rippe as the Auditor in ply chain and Group-wide support func- proposals for resolutions by the General Charge. The current mandate period tions. At year-end 2016, Getinge Executive Meeting on election of auditors and fees expires at the 2017 AGM. The auditors Team comprised 12 individuals. These are to auditors, for which the Committee is to report to the Auditing Committee and the presented on pages 52–53 in this Annual monitor that the auditor’s mandate period Board on their findings. In addition to report. The Getinge Executive Team met does not exceed applicable rules, procure standard audit assignments, Öhrlings 12 times in 2016. The focus of the meetings the audit and present a recommendation PricewaterhouseCoopers AB provides was mainly the Group’s strategic and in accordance with the EU Audit Regula- advisory services and performs investiga- operational performance and on monitor- tion. The Auditing Committee is also to tions. Such assignments take place in ing results. examine and monitor the independence of accordance with the regulations deter- the auditors and pay particular attention mined by the Auditing Committee for Operational business and to whether the auditors provide other approval of the nature and scope of the corporate staff functions non-audit services. The Auditing Commit- services and the fees for such services. Getinge’s business operations comprise tee is also to publish guidelines on non-au- The performed assignments are not the EMEA, APAC and the Americas sales dit services provided by the auditors and, deemed to have given rise to a conflict regions with sales companies, the Busi- in applicable cases, approve the provision of interest. Details about the amounts ness Category Units Surgical Workflows, of such services in accordance with these of remuneration paid to auditors are Acute Care Therapies and Patient & Post guidelines. The Auditing Committee is to presented in Note 5. Acute Care Business Category Units, examine and monitor the consolidated whose main task is to develop world lead- financial statements and provide recom- CEO and Getinge Executive Team ing technologies and products within their mendations and proposals on ensuring Alex Myers left his position as President & respective fields, as well as the group the reliability of the financial reporting CEO of Getinge in August 2016, and function supply chain. Each unit is headed and monitor the efficiency of the compa- Joacim Lindoff has served as Acting Presi- by an operational management team ny’s internal control and risk manage- dent and CEO of Getinge since August 22, responsible for the business activities of ment. In addition, the Auditing Committee 2016 and leads Getinge’s ongoing opera- each unit. The operational management is involved in planning the external audits tions. On 3 November 2016, the Board team is the function below the Getinge
Fees for Board and Committee work 2016 (SEK)
Name Board fee Committee fee Total Carl Bennet 1,150,000 125,000 1,275,000 Johan Bygge 575,000 240,000 815,000 Cecilia Daun Wennborg 575,000 120,000 695,000 Carola Lemne 575,000 120,000 695,000 Johan Malmquist 575,000 92,000 667,000 Malin Persson 575,000 92,000 667,000 Johan Stern 575,000 212,000 787,000 Maths Wahlström 575,000 92,000 667,000 Total 5,175,000 1,093,000 6,268,000
48 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
Executive Team that is responsible for financial manager, who is responsible for financial reports on a monthly basis and ensuring and monitoring that the deci- the financial control of the business unit the company’s financial position is dis- sions made are carried out. and for ensuring that the financial state- cussed at every Board meeting. The effi- Getinge’s Group functions are located ments are accurate, complete and submit- ciency of the internal control activities is centrally to coordinate finance, IT, legal, ted in good time prior to consolidated regularly followed up at different levels in human resources, communication and reporting. the Group and comprises an assessment marketing, group operations (project man- Risk assessment. Risk assessment is of the formulation and operative function agement, shared services and indirect based on the Group’s financial targets. of key control elements that have been spend) as well as quality control and regu- The overall financial risks have been identified and documented. latory compliance. These functions are defined and are mostly industry specific. Self-assessment and validation: Since responsible for creating applicable Group- By conducting quantitative and qualitative 2006, Getinge Group works with a formal- wide strategies and activity plans within risk analyses based on the consolidated ized process for the follow-up and evalua- their respective areas of responsibility balance sheet and income statement, Get- tion of the effectiveness of documenta- and driving, supporting and monitoring inge can identify the key risks that could tion and control activities. The control the development of the company based threaten the achievement of business and consists of both a Group-wide IT-based on their specific skills. financial targets. In addition, several units tool for self-assessment and validation of in each sales region and supply chain are the self-assessments. The validations are Internal Control and risk manage- analyzed to gain a more detailed under- carried out by controllers from another ment of financial reporting standing of the actual application of the business category unit. Self-assessments Description: At Getinge Group, internal existing rules and regulations. Accordingly, were conducted at all of the most import- control over the financial reporting is an measures to minimize identified risks are ant operating units within the Group in integral part of corporate governance. It formulated centrally within the Group. 2016. In conjunction with the standard comprises processes and methods to Control activities: The identified risks audits, the auditors conducted a valida- safeguard the Group’s assets and accu- related to financial reporting are handled tion of the internal control. The self-as- racy in the financial reporting, and in this by the company’s control activities. For sessment and validation function encom- manner, protects the shareholders’ invest- example, there are automated controls in pass the processes relating to financial ment in the company. IT-based systems that manage authority reporting, production, inventories, sourc- Control environment: Getinge Group’s levels and rights to authorization, as well ing and revenues from products and ser- organization is designed to quickly as manual controls, such as duality in the vices. The system of self-assessment and respond to changes in the market. Opera- day-to-day recording of transactions and validation provides the Board with a tional decisions are thus made at decen- closing entries. Detailed financial analy- proper overview of how the Group man- tralized level, while decisions on strategy, ses of results and follow-ups against bud- ages different flows of information, how focus, acquisitions and overall financial gets and forecasts supplement the opera- the Group reacts to new information and issues are made by Getinge Group’s Board tion-specific controls and provide overall how the various control systems function. and the Getinge Executive Team. The confirmation of the quality of the financial Outcome 2016: The follow-up of the internal control over the financial report- reporting. The Group follows standardized internal control in 2016 indicated that doc- ing at Getinge is designed to manage templates and models to identify and doc- umentation and control activities were, in these conditions. The basis of the internal ument processes and controls. all material respects, established at the control over the financial reporting com- Information and communication: The validated companies. Based on the inter- prises the control environment, including Group has information and communica- nal control that was conducted, the Board the organization, decision-making chan- tion procedures to promote completeness has decided that there is no need to intro- nels, authorities and the responsibilities and accuracy in the financial reporting. duce a separate audit function (internal that are documented and communicated Policies, manuals and work descriptions audit function). in steering documents. Each year, the are available on the company’s intranet Follow-on work: Over the next year, the Board adopts a formal work plan that reg- and/or in printed form. Information chan- continuing work related to internal control ulates the duties of the Chairman and the nels to monitor the efficiency of the inter- in Getinge Group will principally focus on CEO. The Board has established an Audit- nal controls in the Group is regularly risk assessment, control activities and fol- ing Committee to increase knowledge of reported to the relevant parties within the low-up/monitoring. An update of the risk the level of transparency and control of organization via implemented reporting analysis as regards relevant control pro- the company’s accounts, financial report- tools. cesses and risk areas is conducted as a ing and risk management, and a Remuner- Follow-up and monitoring: The finance recurring annual activity. In the Control ation Committee to manage remuneration department and management perform activities area, resources will be used to to CEO and the Getinge Executive Team. monthly analyses of the financial report- document additional processes resulting Each sales region and supply chain has ing at a detailed level. The Auditing Com- from the annual risk analysis. Depending one or more administrative centers that mittee follows up the financial reporting at on the outcome of the implemented are responsible for the day-to-day han- its meetings and the company’s auditors self-assessment, it may be necessary to dling of transactions and accounting. report on their observations and provide address reported shortcomings. Each sales region and supply chain has a recommendations. The Board receives
GETINGE ANNUAL REPORT 2016 49 ADMINISTRATION REPORT
Getinge’s Board of Directors
Carl Bennet (1951) Johan Bygge (1956) Cecilia Daun Wennborg (1963) Chairman of the Board Board member elected by AGM Board member elected by AGM M.Sc. (Economics), Dr. Tech. h.c. M.Sc. (Economics) M.Sc. (Economics) Assignments on Getinge’s Board: Chairman Assignments on Getinge’s Board: Chairman of Assignments on Getinge’s Board: Member of of the Board since 1997. Chairman of the the Auditing Committee. Board member since the Auditing Committee. Board member since Nomination Committee. Chairman of the 2007. 2010. Remuneration Committee. Board member Current assignments: Chairman of EQT Asia Current assignments: Board member of compa- since 1989. Pacific and member of the Executive Team, Vice nies including ICA Gruppen AB, Loomis AB, Current assignments: CEO of Carl Bennet AB, Chairman of Swiss Smile AG, Board member of Bravida Holding AB, Hotell Diplomat AB, Atvexa Chairman of the Board of Elanders and Lifco. Anticimex International AB, Chairman of PSM AB and Sophiahemmet. Board member of Holmen and L E Lundbergs International, China, and Board member of Previous assignments: Vice President of Ambea företagen. I-Med Radiology Network, Australia. AB, President of Carema Vård och Omsorg AB, Previous assignments: President and CEO of Previous assignments: CFO of Investor AB, acting President of Skandiabanken, Head of Getinge. Executive Vice President of Electrolux and CFO Swedish Operations at Skandia and President Shareholding: Holds 15,940,050 Class A shares of Electrolux. of Skandia Link. and 27,153,848 Class B shares through companies. Shareholding: Holds 5,000 Class B shares. Shareholding: Holds 750 Class B shares.
Åke Larsson (1966) Carola Lemne (1958) Johan Malmquist (1961) Board member, representative of Board member elected by AGM Board member elected by AGM Swedish Association of Graduate Engineers M.D, Ph.D., associate professor M.Sc. (Economics) Engineer, Research & Development Assignments on Getinge’s Board: Member of the Assignments on Getinge’s Board: Member of Assignments on Getinge’s Board: Deputy Auditing Committee. Board member since 2003. the Remuneration Committee. Board member representative since 2014. Current Assignments: CEO of the Confederation since 2016. Employed by Maquet Critical Care AB. of Swedish Enterprise. Associate professor at Current assignments: Chairman of Tingstad Shareholding: Holds no shares. Karolinska Institute. Chairman of Uppsala Pappers AB. Board member of Elekta AB (publ.), University. Board member of AFA Försäkringar. Mölnlycke Health Care AB, the Dunker Founda- Co-owner of CALGO holding company. tions, SCA AB and Trelleborg AB. Board member Previous assignments: President and CEO of of Chalmers University of Technology Founda- Praktikertjänst AB, Board member of the tion. Confederation of Swedish Enterprise, Investor Previous assignments: President and CEO of AB, MEDA AB, the Swedish Foundation for Getinge Group from 1997 to 2015, Business Area Strategic Research and Apoteket AB. CEO of Director within Getinge Group, President of Danderyds Sjukhus AB. Clinical Research Getinge Group’s French subsidiary, President Manager at Pharmacia & Upjohn AB. of subsidiaries in the Electrolux Group. Shareholding: Holds 2,300 Class B shares. Shareholding: Holds 55,555 Class B shares.
50 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
Maria Grehagen Hedberg (1958) Peter Jörmalm (1959) Rickard Karlsson (1970) Deputy representative of the Swedish Metal- Deputy representative of Unionen Board member, representative of the Swedish workers’ Union Assembly Service Product Specialist. BCU Service Metalworkers’ Union Assembly Assignments on Getinge’s Board: Deputy Excellence Surgical Workflow. Assignments on Getinge’s Board: Board mem- representative since 2014. Assignments on Getinge’s Board: Deputy ber since 2014. Deputy 2013–2014. Employed Employed by Maquet Critical Care AB. 2012–2013. Board member 2014–2015. Deputy by Getinge Sterilization AB. Shareholding: Holds no shares. 2016–2017. Shareholding: Holds no shares. Employed by Getinge Infection Control AB. Shareholding: Holds no shares.
Malin Persson (1968) Johan Stern (1951) Maths Wahlström (1954) Board member elected by AGM Board member elected by AGM, Vice Chairman Board member elected by AGM M.Sc. in Industrial Engineering & Management of the Board M.Sc. (Economics) Assignments on Getinge’s Board: Member of M.Sc. (Economics) Assignments on Getinge’s Board: Member of the the Remuneration Committee. Board member Assignments on Getinge’s Board: Member of Remuneration Committee. Board member since elected by AGM since 2014. the Auditing Committee. Member of the Remu- 2012. Current assignments: CEO and owner of neration Committee. Board member since 2004. Current assignments: Chairman of KMG Capital Accuracy AB, Board member of companies Current assignments: Chairman of Healthinvest Partners, LLC, Surefire Medical, Inc. and in Tri- including Mekonomen, Hexatronic, Hexpol AB, Partners AB, Rolling Optics AB, Fädriften Invest omed AB. Board member and independent lead Konecranes Plc and Peab. AB, Skanör Falsterbo Kallbadhus AB and Harry director of Coherus Biosciences Inc, Board mem- Previous assignments: CEO of the Chalmers Cullberg’s Fund Foundation. Board member of ber of Alteco Medical AB, PCI HealthDev, LLC and University of Technology Foundation, many Carl Bennet AB, Elanders AB, Lifco AB, Circuit Clinical, Inc. years’ experience in major Swedish industrial RP Ventures AB, Swedish-American Chamber Previous assignments: More than 30 years’ interna- enterprises such as the Volvo Group. of Commerce, Inc. and Estea AB. tional experience in preventive care and healthcare Shareholding: Holds 2,000 Class B shares. Previous assignments: Active within SEB’s from such positions as CFO of the Gambro Group operations in Sweden and the US. and as CEO of Gambro Healthcare Inc. He has also Shareholding: Holds 30,104 Class B shares. served as CEO of Fresenius Medical Services and was a member of the Group management for Fre- senius Medical Care AG & Co KGaA. Shareholding: Holds 9,000 Class B shares.
GETINGE ANNUAL REPORT 2016 51 ADMINISTRATION REPORT
Getinge Executive Team
Joacim Lindoff (1973) Reinhard Mayer (1967) Carsten Blecker (1966) Acting President & CEO CFO President EMEA – M.Sc. (Economics) Diploma in Business Engineering and – PhD in Dentistry, Doctorate in Business – Swedish citizen Economics Administration – Employed at Getinge Group since 1999 – German citizen – German citizen – Shareholding: Holds no shares – Employed at Getinge Group since 2002 – Employed at Getinge Group since 2014 – Shareholding: Holds no shares – Shareholding: Holds no shares Previous experience: Executive Vice President of Getinge’s former Infection Control business Previous experience: CFO of Getinge’s former Previous experience: President WEMEA in Med- area. He has previously held senior positions at Medical Systems business area. He has previ- ical Systems and President Middle East & Africa NIBE and was Chairman of the medical technol- ously held senior positions in the finance func- for Getinge. Carsten’s previous experience ogy industry organization, Swedish Medtech, tion of companies including Lexware GmbH & includes positions at Biomet, McKinsey & Com- from 2010 to 2014. Co. and Dow Chemical. pany, Kimberly-Clark, Medtronic and Palex Medical.
Paul Lyon (1962) Markus Medart (1970) Raoul Quintero (1956) President Asia/Pacific Acting President Supply Chain and Chief Pur- President Americas – B.Sc. Engineering, degree in Business chasing Officer – B.A. Political Science Administration – Degree in Business Engineering – American citizen – Australian citizen – German citizen – Employed at Getinge Group since 2008 – Employed at Getinge Group since 2007 – Employed at Getinge Group since 2004 – Shareholding: Holds no shares – Shareholding: Holds no shares – Shareholding: Holds no shares Previous experience: President Maquet North Previous experience: Acting Executive Vice Previous experience: Chief Operating Officer America at Getinge. Raoul’s previous experi- President for Getinge’s former Extended Care at Getinge’s former Medical Systems until year- ence from the medical technology industry business area. He has more than 20 years of end 2015/2016. Prior to that, he held senior posi- including leading positions at Boston Scientific international experience from many different tions in Medical Systems, including President and Guidant Corporation. markets and has previously held senior posi- Surgical Workplaces and Purchasing Manager. tions at listed companies in both South-East Asia and Australia.
52 GETINGE ANNUAL REPORT 2016 ADMINISTRATION REPORT
Lena Hagman (1965) Felix Lara (1969) Magnus Lundbäck (1969) Executive Vice President Quality Regulatory President Patient & Post-Acute Care Executive Vice President Human Resources & Compliance – B.Sc. in Mechanical Engineering and MBA Sustainability – B.Sc. Chemistry and Textile Engineering – American citizen – PhD in Strategy and Organization and – Swedish citizen – Employed at Getinge Group since 2014 Licentiate of Science – Employed at Getinge Group since 2010 – Shareholding: Holds no shares – Swedish citizen – Shareholding: Holds no shares – Employed at Getinge Group since 2017 Previous experience: Senior Vice President – Shareholding: Holds no shares Previous experience: Until year-end 2015, Lena Marketing and Business Development at Hagman was Senior Vice President, Group Getinge’s Extended Care business area. He Previous experience: SVP Human Resources & Quality & Regulatory Compliance for Getinge has more than 15 years of experience from the Sustainability at Gunnebo Group. He has previ- Group. Lena has a broad background from the heathcare industry and has held senior posi- ously served as Executive Vice President field of quality and her experience includes tions in marketing and business development Human Resources and Sustainability at Getinge working at companies including Capio, at companies including Grünenthal Group and as Vice President of Human Resources at Neoventa Medical AB and Mölnlycke and Bristol-Myers Squibb. Volvo Car Corporation. Healthcare.
Frédéric Pette (1973) Kornelia Rasmussen (1977) Jens Viebke (1967) Acting President, Surgical Workflows Executive Vice President Communications & President Acute Care Therapies – B.Sc. in Economics, a Master’s degree in Brand Management – Executive MBA, PhD in Polymer Technology HR Management and an MBA. – International Business School, IHM Business and MSc Chemical Engineering – French citizen School and Communications at Jönköping – Swedish citizen – Employed at Getinge Group since 2013 University – Employed at Getinge Group since 2010 – Shareholding: Holds no shares – Swedish citizen – Shareholding: Holds no shares – Employed at Getinge Group since 2012 Previous experience: Frédéric Pette served as – Shareholding: Holds no shares Previous experience: Jens Viebke served as Chief Strategy Officer of Surgical Workflows at Chief Technology Officer of Acute Care Thera- Getinge until August 2016. He has previously Previous experience: Head of Group Commu pies at Getinge until June 2016. He had previ- held senior positions at companies including nications for Getinge Group. Prior to joining ously held positions at GE Healthcare Life Zimmer, Stryker and American Medical Getinge in 2012, she held several senior posi- Sciences. Systems. tions in communications at Volvo Car Corporation, including responsibility for global internal and external communication.
GETINGE ANNUAL REPORT 2016 53 ADMINISTRATION REPORT
Proposed allocation of profits Getinge AB (publ), Corp. Reg. No. 556408-5032
The following profits in the Parent Company are at the disposal of the Annual General Meeting: Share premium reserve 3,435 Retained earnings 3,259 Net profit for the year 222 Total 6,916
The Board and Chief Executive Officer propose that a dividend of SEK 2.00 per share shall be distributed to shareholders 477 to be carried forward 6,439 Total 6,916
The Board of Directors deems the proposed dividend to be justified in relation to requirements that the Group’s nature of business, scope and risks impose on consolidated shareholders’ equity and the Group’s consolidation requirements, liquidity and financial position.
The Board of Directors and CEO affirm that the consolidated financial statements have been prepared in accordance with international financial report- ing standards IFRS, which have been adopted by the EU, and provide a fair and accurate account of the Group’s financial position and profit. This Annual Report was prepared in accordance with generally accepted accounting policies and provides a fair and accurate account of the Parent Company’s finan- cial position and profit.
The Administration Report for the Group and Parent Company provides a fair and accurate overview of the performance of the Parent Company and the Group’s operations, financial position and earnings and describes the material risks and uncertainties faced by the Parent Company and companies belonging to the Group.
Gothenburg, March 1, 2017
Carl Bennet Johan Bygge Carola Lemne Johan Malmquist Chairman AGM-elected Board member AGM-elected Board member AGM-elected Board member
Malin Persson Johan Stern Maths Wahlström Cecilia Daun Wennborg AGM-elected Board member AGM-elected Board member AGM-elected Board member AGM-elected Board member Vice Chairman
Rickard Karlsson Åke Larsson Joacim Lindoff Board member, Board member, CEO Representative of the Swedish Representative of the Swedish Metalworkers’ Union Association of Graduate Engineers
Our auditor’s report was submitted on March 1, 2017 Öhrlings PricewaterhouseCoopers AB
Johan Rippe Eric Salander Authorized Public Accountant Authorized Public Accountant Auditor in Charge
54 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated financial statements
Consolidated income statement
SEK M Note 2016 2015 Net sales 2, 3 29,756 30,235 Cost of goods sold 4 –15,916 –16,072 Gross profit 13,840 14,163
Selling expenses 4 –6,250 –6,605 Administrative expenses 4 –3,359 –3,300 Research and development costs 32, 4 –671 –598 Acquisition expenses 4 –21 –33 Restructuring and integration costs 4 –1,313 –657 Other operating income 288 222 Other operating expenses –227 –463 Operating profit 3, 4, 5, 6 2,287 2,729
Interest income and other similar income 7 25 26 Interest expenses and other similar expenses 8 –662 –758 Profit after financial items 1,650 1,997 Taxes 9 –437 –540 Net profit for the year 1,213 1,457
Attributable to: Parent Company’s shareholders 1,188 1,390 Non-controlling interests 25 67 1,213 1,457
Earnings per share, SEK* 11 4.98 5.83 – weighted average number of shares for calculation of earnings per share (thousands) 11 238,323 238,323
* Before and after dilution
Consolidated statement of comprehensive income
SEK M Note 2016 2015 Net profit for the year 1,213 1,457
Other comprehensive income Items that cannot be restated in profit for the period Actuarial gains/losses pertaining to defined-benefit pension plans –280 –23 Tax attributable to items that cannot be restated in profit 104 6
Items that can later be restated in profit for the period Translation differences and hedging of net investments 551 –115 Cash-flow hedges 26 86 340 Tax attributable to items that can be restated in profit 326 –75 Other comprehensive income for the period, net after tax 787 133 Total comprehensive income for the period 2,000 1,590
Comprehensive income attributable to Parent Company’s shareholders 1,964 1,528 Non-controlling interests 36 62
GETINGE ANNUAL REPORT 2016 55 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet
SEK M Note 2016 2015 ASSETS Non-current assets Intangible assets 3, 4, 12 32,004 30,543 Tangible assets 3, 4, 12, 19 4,313 4,699 Financial instruments, long-term 26 25 80 Financial receivables, long-term 71 69 Deferred tax assets 9 1,233 1,225 Total non-current assets 37,646 36,616
Current assets Inventory 13 5,431 5,409 Accounts receivable 14 8,159 7,470 Current tax assets 442 604 Financial instruments, current 26 166 158 Other receivables 738 716 Prepaid expenses and accrued income 15 949 794 Cash and cash equivalents 17 1,680 1,468 Total current assets 17,565 16,619 TOTAL ASSETS 55,211 53,235
SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity Share capital 16 119 119 Other capital provided 5,960 5,960 Other reserves 955 3 Retained earnings 10 13,474 13,121 Shareholders’ equity attributable to the Parent Company’s shareholders 20,508 19,203 Non-controlling interests 408 390 Total shareholders’ equity 20,916 19,593
Long-term liabilities Interest-bearing long-term loans 18, 19 15,914 16,006 Other long-term liabilities 182 170 Provisions for pensions, interest-bearing 18, 22 3,368 3,052 Provisions for pensions, non-interest-bearing 22 51 65 Deferred tax liabilities 9 599 1,074 Restructuring reserves, long-term 20 153 159 Other provisions, long-term 21 359 377 Total long-term liabilities 20,626 20,903
Current liabilities Restructuring reserves, current 20 378 230 Other provisions, current 21 316 338 Interest-bearing current loans 18, 19 5,787 5,277 Advance payments from customers 514 475 Accounts payable 2,201 1,986 Current tax liabilities 112 63 Financial instruments, current 26 800 931 Other liabilities 565 552 Accrued expenses and deferred income 23 2,996 2,887 Total current liabilities 13,669 12,739 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 55,211 53,235
Refer to Note 24 for information concerning Getinge Group’s pledged assets and contingent liabilities.
56 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
Changes in shareholders’ equity for the Group
Other Non- Total share- Share capital Retained controlling holders’ SEK M capital provided Reserves1 earnings Total interests equity Opening balance at January 1, 2015 119 5,960 –153 12,416 18,342 352 18,694 Total comprehensive income for the period – – 156 1,372 1,528 62 1,590 Dividend – – – –667 –667 –24 –691 Closing balance at December 31, 2015 119 5,960 3 13,121 19,203 390 19,593
Opening balance at January 1, 2016 119 5,960 3 13,121 19,203 390 19,593 Total comprehensive income for the period – – 952 1,012 1,964 36 2,000 Share-based remuneration – – – 8 8 – 8 Dividend – – – –667 –667 –18 –685 Closing balance at December 31, 2016 119 5,960 955 13,474 20,508 408 20,916
1) Reserves pertain to cash-flow hedges, hedges of net investments and translation differences.
GETINGE ANNUAL REPORT 2016 57 CONSOLIDATED FINANCIAL STATEMENTS
Consolidated cash flow statement
SEK M Note 2016 2015 Operating activities EBITDA 4,990 5,187 Expensed restructuring and integration costs* 20 1,015 657 Paid restructuring and integration costs 20 –872 –918 Other non-cash items 31 85 230 Interest paid –617 –719 Other financial items –20 –13 Taxes paid –332 –858 Cash flow before changes to working capital 4,249 3,566
Changes in working capital Inventory –234 –171 Current receivables –252 –30 Current liabilities –92 93 Cash flow from operating activities 3,671 3,458
Investing activities Acquired operations 25 –212 –41 Divested operations – 302 Capitalized development costs –594 –702 Equipment for rental –160 –306 Investments and divestments of fixed assets –831 –1,046 Cash flow from investing activities –1,797 –1,793
Financing activities Raising of loans 1,822 1,907 Repayment of loans –2,928 –1,612 Change in long-term receivables 42 –26 Dividend paid –685 –691 Cash flow from financing activities –1,749 –422
Cash flow for the year 125 1,243
Cash and cash equivalents at the beginning of the period 1,468 1,482 Cash flow for the year 125 1,243 Translation differences 87 –1,257 Cash and cash equivalents at year-end 31 1,680 1,468
* Excluding write-downs of fixed assets
58 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 Accounting policies
GENERAL INFORMATION comprehensive income, in which case the deferred tax is recognized Getinge AB, which is the Parent Company of Getinge Group, is a limited liability together with the underlying transaction in other comprehensive income company with its registered offices in Gothenburg, Sweden. A description of (refer to Note 9). the company’s operations is included in the Administration Report on page 42. Consolidated financial statements The consolidated financial statements for the financial year that ends at 31 Subsidiaries are all companies (including structured entities) over which the December, 2016 have been approved by the Board at 1 March, 2017 and will be Group exercises a controlling influence. The Group controls a company when presented to the AGM at 29 March, 2017 for adoption. it is exposed to or has the right to variability of returns from its holding in the company and can affect these returns through its influence over the com- Accounting and measurement policies pany. The controlling influence is usually transferred at the acquisition date. Getinge’s consolidated financial statements have been prepared in accor- Acquired companies are consolidated into the consolidated financial state- dance with International Financial Reporting Standards (IFRS), issued by the ments in accordance with the purchase method, which means that the cost International Accounting Standards Board (IASB), including interpretations of the shares in subsidiaries is eliminated against their shareholders’ equity issued by the International Financial Reporting Interpretations Committee at the acquisition date. Accordingly, only the portion of the subsidiary’s (IFRIC) as adopted by the EU. In addition, the Swedish Financial Reporting shareholders’ equity that has arisen after the acquisition is included in con- Board’s recommendation RFR 1 has been applied. The consolidated financial solidated shareholders’ equity. Getinge applies IFRS 3 Business Combina- statements include the financial statements for Getinge AB and its subsid- tions for acquisitions after January 1, 2004, in accordance with the interim iaries and were prepared in accordance with the cost method. The Parent regulations in IFRS 1. Getinge has chosen not to restate earlier acquisitions. Company applies the same accounting policies as the Group, except in the –Shareholders’ equity in the subsidiaries is thus determined on a mar- instances stated below in the section “Parent Company’s accounting poli- ket-based value of identifiable assets, liabilities, provisions and contingent cies.” The differences that arise between the Parent Company and the liabilities on the date of the acquisition. If the cost of the shares in the subsid- Group’s accounting policies are attributable to the limited opportunities for iaries exceeds the value of the acquired net assets, calculated as described the application of IFRS in the Parent Company, as a result of the Swedish above, the difference is assigned to goodwill. If the acquisition cost falls below Annual Accounts Act and the Swedish Pension Obligations Vesting Act. The the fair value of the acquired subsidiary’s net assets, the negative goodwill is Parent Company’s functional currency is Swedish kronor (SEK), which is also recognized directly in profit and loss as other operating income. If assets are the Parent Company’s and Group’s presentation currency. This means that included in the subsidiary at the time of acquisition – for example, property, par- the financial statements are presented in Swedish kronor (SEK). Unless oth- ticipations or other operations – that will not be retained but sold in the near erwise stated, all amounts are given in millions of Swedish kronor (SEK M). future, these assets are recognized in the acquisition analysis at the amount expected to be received. Deferred tax is calculated on the difference between Significant estimates and assessments the calculated market values of assets and liabilities and the fiscal residual val- To prepare the financial statements in accordance with IFRS, the company ues. Intra-Group transactions and unrealized inter-company profits are elimi- management is required to make assessments and assumptions that affect the nated in the consolidated financial statements, except with respect of shares in recognized amounts of assets and liabilities and other information in the finan- non-controlling interests. The fiscal effect is also calculated when eliminating cial statements and for revenues and expenses recognized during the period. internal transactions, based on the nominal tax rate. In profit and loss, net Assumptions, assessments and estimates are reviewed on a regular basis. The profit/loss is recognized without deductions for non-controlling interests in net actual outcome may diverge from these assumptions, assessments and esti- profit/loss for the year. Non-controlling interests are recognized as a separate mates. The Board of Directors and Getinge Executive Team have deemed that item in consolidated shareholders’ equity in the balance sheet. The Group the following areas may have a significant impact on Getinge’s earnings and applies IFRS 3 Business Combinations to all acquisitions made after January 1, financial position: 2010, whereby the most significant change entails expensing transaction costs in conjunction with an acquisition. Measurement of identifiable assets and liabilities in connection with acqui- sitions. In conjunction with acquisitions, all identifiable assets and liabilities Foreign currencies in the acquired company are identified and measured at fair value, including Functional currency. Transactions in foreign currencies are translated to the the value of assets and liabilities in the previously owned share as well as the functional currency of the financial statements according to the exchange share attributable to non-controlling interests. rate on the date of the transaction. Receivables and liabilities in foreign cur- rencies are measured at the closing day rate, and unrealized currency gains Goodwill and intangible assets with an indefinite useful life. The impair- and losses are included in profit and loss. Exchange-rate differences attribut- ment requirement for goodwill and other intangible assets with an indefinite able to operating receivables and liabilities are recognized as other operat- useful life is tested annually by Getinge in accordance with the accounting ing income (operating expenses). Exchange-rate differences regarding finan- policy described here in Note 1. The recoverable amount for cash generating cial assets and liabilities are recognized under “Other financial items.” When units (CGUs) has been established through the measurement of value in use. preparing the consolidated financial statements, the balance sheets of the For these calculations, certain estimations must be made (see Note 12). Group’s foreign operations are translated from their functional currency to SEK, based on the closing day rate. Pension commitments. Recognition of the costs of defined-benefit pensions and other applicable retirement benefits is based on actuarial valuations, Translation of foreign operations. Getinge applies the current method for relying on key assumptions for discount rates, future salary increases, translation of foreign subsidiaries’ balance sheets and income statements. expected inflation. In turn, the discount rate assumptions are based on rates This means that all assets and liabilities in subsidiaries are translated at the for high-quality fixed-interest investments with durations similar to the pen- closing day rate, and all income statement items are translated at average sion plans (see Note 22). annual exchange rates. Translation differences arising in this context are due to the difference between the income statement’s average exchange rates Obsolescence reserve. Inventories are recognized at the lower of cost and closing day rates, and to the net assets being translated at a different according to the first in/first out principle, and net realizable value. The value exchange rate at year-end than at the beginning of the year. Translation dif- of inventories is adjusted for the estimated decrease in value attributable to ferences are recognized under other comprehensive income. The total products no longer sold, surplus inventories, physical damage, lead times for translation differences in conjunction with divestments are recognized inventories, and handling and sales overheads. If the net realizable value is together with the gains/losses arising from the transaction. Hedge account- lower than the cost, a valuation reserve is established for inventory obsoles- ing is applied to external loans raised in order to reduce translation effects in cence (see Note 13). exposed currencies to match the net assets in foreign subsidiaries. Exchange-rate differences for these loans are recognized directly in other Deferred tax. The measurement of loss carryforwards and the company’s comprehensive income for the Group. ability to utilize unutilized loss carryforwards is based on the company’s assessments of future taxable income in various tax jurisdictions and Revenue recognition includes assumptions regarding whether expenses that have not yet been Sales include products, services and rents, excluding indirect sales tax and subject to taxation are tax deductible. Deferred tax is recognized in profit discounts provided. Income is recognized when, essentially, all risks and and loss unless the deferred tax is attributable to items recognized in other rights connected with ownership have been transferred to the buyer. This
GETINGE ANNUAL REPORT 2016 59 CONSOLIDATED FINANCIAL STATEMENTS
usually occurs in connection with delivery, after the price has been deter- anticipated useful life. The useful life can, in certain cases, be indefinite. mined and collection of the receivable is appropriately secured. If delivery of These intangible assets are not amortized, instead they are subject to an finished products is postponed at the buyer’s request, but the buyer assumes impairment test every year or more often if there is an indication that there the proprietary rights and accepts the invoice (a “bill and hold” sale), income could have been a decrease in value. Costs for development, whereby is recognized when the proprietary rights are transferred. Income is normally research results or other knowledge is applied to produce new products, are recognized once the buyer has accepted delivery and after installation and recognized as an asset in the balance sheet to the extent that these prod- final inspection. However, income is recognized immediately after delivery if ucts are expected to generate future financial benefits. These costs are cap- the installation and final inspection are of a simple nature, and after estab- italized when management deems that the product is technically and finan- lishing provisions for estimated residual expenses. Income recognition for cially viable, which is usually when a product development project has services takes place as and when the services are performed. Income from reached a defined milestone in accordance with an established project rental is allocated to a particular period over the term of the rental agree- model. The capitalized value includes expenses for material, direct expenses ment. Interest income is recognized continuously and dividends received for salaries and indirect expenses that can be assigned to the asset in a rea- are recognized after the right to the dividend is deemed secure. In the con- sonable and consistent manner. In other cases, development costs are solidated financial statements, intra-Group sales are eliminated. For larger expensed as they arise. Research costs are charged to earnings as they arise. assignments extending over more than one accounting period, where out- Capitalized expenses are amortized on a straight-line basis from the point in come can be measured in a reliable manner, income and expenses are recog- time at which the asset is put into commercial operation and during the nized in relation to the degree of completion of the assignment on the clos- asset’s estimated useful life. The amortization period is between three and ing date. The degree of completion of an assignment is established in a ratio 15 years. between accrued assignment costs for work completed on the closing date and the calculated total assignment costs, except in those instances this Tangible assets does not correspond to the degree of completion. Changes in the scope and Properties, machinery, equipment and other tangible assets are recognized claims of the assignment are included only if there is an agreement with the at cost, with deductions for accumulated depreciation and any impairment customer. When the outcome of an assignment cannot be calculated in a losses. The cost includes the purchase price and expenses directly attribut- reliable manner, only the amount corresponding to the accrued assignment able to the asset to bring the asset to the site and in the working condition for costs that will probably be paid by the client is recognized as revenue. Other its intended use. Examples of directly attributable expenses included in the accrued assignment costs are recognized as costs in the period in which cost are delivery and handling costs, installation, legal services and consul- they occur. If it is probable that the total amount of accrued assignment tancy services. Assets provided to the company in conjunction with the costs will exceed total revenue from the assignment, the expected loss is acquisition of new subsidiaries are recognized at market value on the acqui- promptly recognized as a cost in its entirety. sition date. Depreciation is conducted straight line. The value in the balance sheet represents acquisition costs with deduction for accumulated depreci- Government grants ation and any impairment losses. Land is not depreciated since it is deemed Government grants are measured at fair value when it is probable that the to have an infinite economic life, however, the depreciation of other assets is terms associated with the grants will be met and that the grants will be based on the following anticipated useful lives: received. Government grants relating to costs are recognized in profit and loss. The income is recognized in the same period as the cost that grants are Class of assets Depreciation, number of years intended to compensate. Government grants relating to the acquisition of Land 40 – 50 assets reduce the assets’ carrying amounts. Grants affect recognized earn- Buildings 10 – 50 ings over the assets’ useful life by reducing depreciation. Machinery 5 – 25 Equipment 10 Financial income and expenses Production tools 5 Financial income and expenses include interest income on bank deposits Equipment for rental 5 and receivables, interest expenses on loans, income from dividends, unreal- Cars 4 ized and realized profits and losses on financial investments, exchange-rate Computer equipment 3 differences, and the change in value of derivative instruments used in finan- cial activities. Borrowing costs in conjunction with the raising of loans are Tangible assets comprising parts with different useful lives are treated as recognized as part of the loan to which they pertain and are charged to profit separate components of tangible assets. Standard maintenance and repair during the term of the loan. costs are expensed during the periods in which they arise. More extensive repair and upgrading costs are capitalized and depreciated over the item’s Intangible assets remaining anticipated useful life. Capital gains/losses are recognized under Goodwill. Goodwill comprises the portion of a purchase price for an acquisi- “Other operating income/ expenses.” tion that exceeds the market value of the identifiable assets, with deduc- tions for liabilities and contingent liabilities, calculated on the acquisition Leasing. Getinge as a lessee date, on the share of the acquired company’s assets acquired by the Group. Financial leasing. Leasing of properties, machines and equipment, whereby In a business acquisition whereby the acquisition costs are less than the net the Group essentially assumes the same rights as for direct ownership of the value of acquired assets, assumed liabilities and contingent liabilities, the asset, is classified as financial leasing. Financial leasing is capitalized from difference is recognized directly in profit and loss. Goodwill arising in con- the date on which the lease agreement is entered into, at the lower amount junction with the acquisition of a foreign entity is treated as an asset in the of the assets’ market value or the calculated present value of the underlying foreign entity and translated at the exchange rate on the closing date. Good- leasing payments. Each leasing payment is divided between liabilities and will arising from the acquisition of associated companies is included in the financial expenses so that interest payments on outstanding liabilities are value of the holdings in the associated company. An impairment test of proportional. The corresponding rental liability, after deduction for financing goodwill is conducted once per year or more often if there is an indication costs, is attributed to interest-bearing liabilities, while the interest portion of that there could have been a decrease in value. Impairment of goodwill is rec- leasing costs is recognized in revenue during the lease period. Properties, ognized in profit and loss. The gain or loss in connection with the divestment machines and equipment acquired by leasing are depreciated over their of an entity includes the residual carrying amount of goodwill that pertains anticipated useful lives. to the divested unit. Operational leasing. Leasing of assets whereby the lessor essentially Other intangible assets. Other intangible assets comprise capitalized devel- remains the owner of the asset is classified as operational leasing, and pay- opment costs, customer relations, technical know-how, trademarks, agree- ments made according to operational leasing contracts or rental agree- ments and other assets. Intangible assets are recognized at cost with ments are expensed proportionally during the lease or rental period, respec- deductions for accumulated amortization and any impairment losses. Amor- tively. Any compensation, according to agreement, that the lessee is obliged tization is applied proportionally over the asset’s anticipated useful life, to pay to the lessor if the leasing contract is terminated prematurely is which usually varies between three and 15 years. Acquired intangible assets expensed during the period in which the contract is terminated. are recognized separately from goodwill if they fulfill the criteria for qualify- ing as an asset, implying they can be separated or they are based on contrac- Leasing. Getinge as a lessor tual or other legal rights and that their market value can be established in a Leasing agreements are defined in two categories, operational and financial, reliable manner. Intangible assets that are recognized separately from good- depending on the financial significance of the agreement. Operational leas- will in acquisitions of operations include customer relations, technical ing agreements are recognized as non-current assets. Revenues from oper- know-how, trademarks, agreements, etc. Acquired intangible assets are ational leasing are recognized evenly over the lease period. Straight-line measured at market value and amortized on a straight-line basis over their depreciation is applied to these assets in accordance with the undertakings
60 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
and the depreciation amount is adjusted to correspond with the estimated Cash and cash equivalents. The major portion of cash and cash equivalents realizable value when the undertaking expires. The estimated impairment comprises cash funds held at financial institutions, and only a minor portion requirement is immediately charged to profit and loss. The products’ esti- comprises current liquid investments with a term from the acquisition date mated realizable value at the expiration of the undertaking is continuously of less than three months, which are exposed to only an insignificant risk of followed up on an individual basis. Financial leasing agreements are recog- value fluctuations. Cash and cash equivalents are recognized at nominal nized as long-term and current receivables. Payments received from finan- amounts, which are equivalent to fair value. cial leasing agreements are divided between interest income and deprecia- tion of receivables. Other financial liabilities. This category includes liabilities to credit institu- tions, issued bonds, accounts payable and other current liabilities. Long- Impairment term liabilities have an expected term longer than one year while current lia- At the end of each accounting period, the carrying amount of the assets is bilities have a term of less than one year. Items in this category are initially assessed to determine whether there is any indication that impairment is measured at fair value and in the subsequent periods at amortized cost using required. If there is such an indication, the asset’s recoverable amount is the effective interest method. established. The recoverable amount is deemed to be the higher of the asset’s net realizable value and its value in use, for which the impairment loss Hedge accounting. For derivative instruments or other financial instruments is recognized as soon as the carrying amount exceeds the recoverable that meet hedge-accounting requirements under the cash-flow hedging amount. Earlier recognized impairment losses on machines and equipment method or hedging of net investments in foreign operations method, the are reversed if the recoverable amount is deemed to have increased, effective component of the value change is recognized in other comprehen- although the impairment losses are not reversed to an amount greater than sive income. Accumulated value changes from cash-flow hedges are what the carrying amount would have been if no impairment losses had been reversed from shareholders’ equity to profit and loss at the same time as the recognized in earlier years. Recognized impairments of goodwill are not hedged item impacts profit and loss. Accumulated value changes from the reversed. hedging of net investments in foreign operations are reversed from share- holders’ equity to profit and loss when the foreign operation is divested in full Inventories or in part. Interest-bearing liabilities to which hedge accounting has been Inventories are measured at the lower of cost and production value, accord- applied in accordance with the method for fair-value hedging are measured ing to the first in/first out (FIFO) principle, and net realizable value. Invento- at fair value regarding the hedged risk. The effect of the hedge is recognized ries include a share of indirect costs related to this. The value of finished on the same line as the hedged item. products includes raw materials, direct work, other direct costs and produc- tion-related expenses including depreciation. The net realizable value is cal- Fair value. The fair value of derivative instruments was calculated using the culated as the estimated sales price less estimated completion and selling most reliable market prices available. This requires all instruments that are expenses. An assessment of obsolescence in inventories is conducted on an traded in an effective market, such as currency forward contracts, to be ongoing basis during the year. The value of inventories is adjusted for the measured at marked-to-market. In terms of instruments for which no reliable estimated decrease in value attributable to products no longer sold, surplus prices were available, such as interest-rate swaps, cash flows were dis- inventories, physical damage, lead times for inventories, and handling and counted using deposit and interest-rate swaps for the currency in question. sales overheads. If the net realizable value is lower than the cost, a valuation Translation to SEK is conducted at the closing day rate. reserve is established for inventory obsolescence. Remuneration to employees Financial instruments Recognition to pensions. Getinge has both defined-contribution and A financial asset or financial liability is recognized in the balance sheet when defined-benefit pension plans, of which some have assets in special funds or the company is party to the contractual conditions of the instrument. A similar securities. The plans are usually financed by payments from the financial asset is derecognized from the balance sheet when the contractual respective Group companies and the employees. The Group’s Swedish com- rights to the asset are realized, extinguished or the company loses control panies are generally covered by the ITP plan, which does not require any pay- over them. A financial liability is derecognized from the balance sheet when ments from employees. the contractual obligation has been fulfilled or in some other manner extin- guished. Acquisitions and sales of financial assets are recognized on the Defined-benefit plans. Pension expenses for defined-benefit plans are cal- transaction date, which is the date on which the company commits to culated using the Projected Unit Credit Method in a manner that distributes acquire or sell the assets, apart from cases in which the company acquires or expenses over the employee’s working life. The calculation is performed sells listed securities, when liquidity-date reporting is applied. annually by independent actuaries. These commitments are measured at Financial instruments are recognized at amortized cost or fair value, the present value of expected future payments, with consideration for calcu- depending on the initial classification according to IAS 39 (see below). At the lated future salary increases, utilizing a discount rate corresponding to the end of each accounting period, the company assesses whether there are interest rate of first-class company or government bonds with a remaining objective indications that a financial asset or group of financial assets requires term that is almost equivalent to the actual commitments. The Group’s net impairment. liabilities for each defined-benefit plan (which is also recognized in the bal- Further information about financial instruments can be found in Note 14 ance sheet), comprises the present value of the obligation less the fair value Accounts receivable, Note 18 The Group’s interest-bearing net debt and of the plan assets. If the value of the plan assets exceeds the value of the Note 26 Financial risk management. obligation, a surplus arises, which is recognized as an asset. The recognized asset value is limited to the total of costs related to services rendered during Financial assets measured at fair value in profit and loss. Financial assets in previous periods and the present value of future repayments from the plan, this category comprise derivatives. They are included in current assets if or reductions in future contributions to the plan. The actuarial assumptions they are expected to be settled within 12 months of the end of the reporting constitute the company’s best assessment of the different variables that period, otherwise, they are classified as non-current assets. All derivatives determine the costs of providing the benefits. When actuarial assumptions are measured at fair value in the balance sheet. Changes in fair value are rec- are used, the actual results could differ from the estimated results, and actu- ognized as a component of other comprehensive income insofar as they are arial assumptions change from one period to another. These differences are part of a hedging relationship that qualifies as hedge accounting. They are recognized as actuarial gains and losses. Actuarial gains and losses are rec- reversed to profit and loss when the hedged transaction occurs at which ognized in other comprehensive income for the period in which they are point they are recognized as part of gross profit. incurred.
Loan receivables and accounts receivable. Assets in this category comprise Costs for defined-benefit pension plans in profit and loss comprise the total long-term financial receivables, accounts receivable and other current costs for service during the current and earlier years, interest on commitments receivables. They are included in current assets with the exception of items and the expected return on plan assets. Costs for service during the current that fall due more than 12 months after the end of the reporting period, which period and previous periods are recognized as employee costs. The interest are classified as non-current assets. Assets in this category are initially mea- component of pension expenses is recognized under financial expenses. sured at fair value including transaction costs. After the acquisition date, they are recognized at amortized cost using the effective interest method. Defined-contribution plans. These are plans in which the company pays Accounts receivable are recognized in the amounts that are expected to be fixed fees to a separate legal entity and does not have any legal or informal received after deductions for doubtful receivables, which are assessed on a obligation to pay additional fees. The Group’s payments for defined-contri- case-by-case basis. The expected term of accounts receivable is short, bution plans are recognized as expenses during the period in which the which is why amounts are recognized at nominal values without discounting. employees perform the services that the fee covers. The part of the Swedish Any impairment of accounts receivable is recognized in operating expenses. ITP plan concerning family pension, disability pension, and employment
GETINGE ANNUAL REPORT 2016 61 CONSOLIDATED FINANCIAL STATEMENTS
group life insurance financed by insurance with Alecta is a defined-benefit Cash flow statements pension multi-employer plan. For this pension scheme, according to IAS 19, a Cash flow statements are prepared in accordance with IAS 7 Statement of company is primarily to recognize its proportionate share of the defined-ben- Cash Flows, indirect method. The cash flows of foreign Group companies are efit pension commitment and the plan assets and expenses associated with translated at average exchange rates. Changes in the Group structure, the pension plan. The financial statements are also to include disclosure acquisitions and divestments, are recognized net, excluding cash and cash required for defined-benefit pension plans. Alecta is currently unable to pro- equivalents, under Acquired operations and Divested operations and are vide the necessary information and therefore the above pension plans are included in cash flow from investing activities. recognized as defined-contribution plans in accordance with item 30 of IAS 19. This means that premiums paid to Alecta will also be recognized on an Earnings per share ongoing basis as expenses in the period to which they pertain. Earnings per share before dilution are calculated by dividing net profit for the year attributable to the Parent Company’s shareholders by the weighted Share-based remuneration average number of shares outstanding during the period. The Group has a long-term incentive program for senior executives for which remuneration is paid in shares. The value of the remuneration for services Dividend provided corresponds to the fair value of the shares on the allotment date. Dividends proposed by the Board of Directors are not deducted from distrib- The remuneration is recognized as an expense over the three-year vesting utable earnings until the dividend has been approved by the Annual General period, with a corresponding increase in shareholders’ equity. Since the Meeting (AGM). allotment of shares is conditional on certain vesting conditions being met, no accumulated expense is recognized for services provided if no shares are Alternative performance measures ultimately earned. Additional social security contributions are expensed and In the annual report alternative performance measures are used to facilitate recognized as liabilities in accordance with UFR 7 (Statement from the Swed- analyses of the Group’s performance. The primary alternative performance ish Financial Reporting Board). measures that are presented are EBITA, Cash conversion and Net debt/ Equity ratio. Definitions and reconciliation of the alternative performance Provisions measures see page 95. Provisions are recognized when the Group has a legal or informal obligation as a result of past events and it is probable that payment will be required to New accounting policies applied by the Group in 2016 fulfill the commitment and if a reliable estimation can be made of the amount No standards, amendments or interpretations effective from the financial to be paid. Pensions, deferred tax liabilities, restructuring measures, guaran- year beginning January 1, 2016 had a material impact on the consolidated tee commitments and similar items are recognized as provisions in the bal- financial statements. ance sheet. Provisions are reviewed at the end of each accounting period. New and revised standards and interpretations that have not Contingent liabilities yet come into effect Contingent liabilities are commitments not recognized as liabilities/provi- A number of new standards and interpretations will come into effect for sions either because it is not certain that an outflow of resources will be financial years beginning on or after January 1, 2016 and were not applied required to regulate the commitment or because it is not possible to make a when preparing these financial statements. None of these are expected to reliable estimate of the amount. have any material impact on the consolidated financial statements with the exception of the following: Income taxes Getinge’s income taxes include taxes on Group companies’ profits recog- IFRS 9 Financial Instruments addresses the classification, measurement nized during the accounting period and tax adjustments attributable to ear- and recognition of financial assets and liabilities. The complete version of lier periods and changes in deferred taxes. Measurement of all tax liabilities/ IFRS 9 was issued in July 2014. It replaces the elements of IAS 39 related to receivables is conducted at nominal amounts and in accordance with the classification and measurement of financial instruments. IFRS 9 retains enacted tax regulations and tax rates or those that have been announced a mix valuation approach but simplifies the approach in certain respects. and will almost certainly be adopted. Tax is recognized directly in sharehold- There will be three measurement categories for financial assets: amortized ers’ equity if the tax is attributable to items that are recognized directly in cost, fair value through other comprehensive income and fair value through shareholders’ equity. Deferred tax is calculated to correspond to the tax profit and loss. The classification of an instrument is to be based on the com- effect arising when final tax is determined. Deferred tax corresponds to the pany’s business model and the characteristics of the instrument. Invest- net effect of tax on all existing differences between fiscal and carrying ments in equity instruments are to be measured at fair value through profit amounts of assets and liabilities by applying applicable tax rates. Temporary and loss, although there is also the option of measuring the instrument at fair differences primarily arise from the depreciation of properties, machines value through other comprehensive income at initial recognition. The instru- and equipment, the market valuations of identifiable assets, liabilities and ment will then not be reclassified to profit and loss when divested. IFRS 9 contingent liabilities in acquired companies, the market valuation of invest- also introduced a new model for calculating a reserve based on expected ments classified as available-for-sale and financial derivatives, gains from credit losses. Classification and measurement are not changed for financial intra-Group inventory transactions, untaxed reserves and tax loss carryfor- liabilities except in cases when a liability is measured at fair value through wards, of which the latter is recognized as an asset only to the extent that it profit and loss based on the fair value option. Changes in value attributable is probable that these loss carryforwards will be matched by future taxable to changes in own risk are then to be recognized in other comprehensive profits. Deferred tax liabilities pertaining to temporary differences that are income. IFRS 9 reduces requirements for applying hedge accounting by attributable to investments in subsidiaries and affiliates are not recognized, replacing the 80–125 criterion with requirements for an economic relation- since the Parent Company, in each instance, can control the point in time of ship between the hedging instrument and the hedged item, and that the reversal of the temporary differences and a reversal in the foreseeable future hedge ratio is the same as that actually used in risk management. Hedging has been deemed improbable. documentation requirements have also been changed compared with the documentation required under IAS 39. The standard has been adopted by EU Segment reporting and is to be applied to the financial year beginning January 1, 2018. The Group Getinge’s operations are controlled and reported primarily by business area. is currently assessing the impact of implementation of the standard. The Each segment is consolidated according to the same policies as for the Group will apply the standard as from 1 January, 2018. Group in its entirety. The earnings of the segments represent their contribu- tion to the Group’s earnings. Assets in a segment include all operating assets IFRS 15 Revenue from Contracts with Customers regulates recognition of used by the segment and primarily comprise intangible assets, tangible revenue. The principles on which IFRS 15 is based provide users of financial assets, inventories, external accounts receivable, other receivables and pre- statements with more informative information about a company’s revenue. paid expenses and accrued income. Liabilities in a segment include all oper- The expanded disclosure requirements entail that information is to be pro- ating liabilities utilized by the segment and primarily comprise provisions vided on the nature, timing and uncertainty of revenue, and cash flows aris- excluding interest-bearing pension provisions and deferred tax liabilities, ing from a contract with a customer. Under IFRS 15, revenue is to be recog- external accounts payable, other current liabilities and accrued expenses nized when the customer passes control of the sold good of service and is and deferred income. Non-distributed assets and liabilities include all tax able to use or benefit from the good or service. IFRS 15 replaces IAS 18 Reve- items and all items of a financial, interest-bearing nature. nue and IAS 11 Construction Contracts and associated SIC and IFRIC. IFRS 15 comes into effect on January 1, 2018. Early adoption is permitted. The stan- dard has been adopted by the EU but the EU has not yet adopted the clarifi-
62 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
cation of the standard. The Group is currently assessing the impact of the over a specific time period, while also having a duty to pay for this entitle- implementation of the standard. The Group will apply the standard as from 1 ment. Recognition for the lessor will for the most part be unchanged. The January, 2018. standard is applicable to financial years beginning on or after January 1, 2019. Early adoption is permitted. The EU has not yet adopted the standard. The IFRS 16 Leases was published by the IASB in January 2016. The standard reg- Group is yet to assess IFRS 16’s full impact, that will be applied as from 1 Jan- ulates recognition of leasing and will replace the IAS 17 Leasing agreements uary, 2019. along with the accompanying interpretations IFRIC 4, SIC–15 and SIC–27. The standard requires assets and liabilities attributable to all leasing agree- None of the other IFRS or IFRIC interpretations that have yet to come into ments, with a few exceptions, to be recognized in the balance sheet. This legal effect are expected to have any significant impact on the Group. recognition is based on the view that the lessee is entitled to use an asset
NOTE 2 Net sales per revenue classification
SEK M 2016 2015 Product sales, capital goods 14,283 13,229 Recurring revenue Product sales 10,352 9,398 Spare parts 1,513 2,234 Service assignments 2,250 3,361 Leasing 1,358 2,013 Total recurring revenue 15,473 17,006 Total 29,756 30,235
NOTE 3 Segment reporting
Segment reporting is prepared in accordance with the same policies as for pulmonary and vascular therapies and a broad selection of products and the Group in its entirety. Getinge’s operations worldwide are organized into therapies for intensive care. three business areas: Acute Care Therapies, Patient & Post-Acute Care and Surgical Workflows. These business areas form the basis for the Group’s Patient & Post-Acute Care: Patient & Post-Acute Care offers solutions for segment information. Business terms and conditions as well as market-reg- daily tasks of lifting and transferring patients. This includes promotion of ulated pricing apply for delivery of products and services between Group early mobility and prevention of pressure ulcers and deep vein thrombosis, companies and no sales are conducted between the various business areas. as well as patient hygiene. The Group has no single customer that accounts for 10% or more of the Group’s sales. Surgical Workflows: Surgical Workflows develops solutions for infection control, operating rooms and advanced IT systems for traceability and man- The reporting segments are active in the following operations agement of the flow of sterile equipment as well as for optimal use of Acute Care Therapies: Acute Care Therapies offers solutions for life sup- resources. The Group’s Life Science segment is also included in this busi- port in acute health conditions. The offering includes solutions for cardiac, ness area.
Depreciation, amortization and Net sales Operating profit* impairment SEK M 2016 2015 2016 2015 2016 2015 Acute Care Therapies 11,804 11,577 1,000 1,346 –1,430 –1,473 Patient & Post-Acute Care 7,456 7,767 665 573 –714 –721 Surgical Workflows 10,496 10,891 1,001 1,054 –558 –264 Group functions – – –379 –244 –1 – Total 29,756 30,235 2,287 2,729 –2,703 –2,458 Interest income and other similar income 25 26 Interest expenses and other similar expenses –662 –758 Tax on profit for the year –437 –540 Net profit for the year 1,213 1,457
* Restructuring and integration costs affected the Group´s operating profit with negative SEK 1,313 M (neg. 657). Acute Care Therapies was charged with SEK 751 M (313), Patient & Post-Acute Care with SEK 156 M (180), Surgical Workflows with SEK 253 M (142) and Group functions with SEK 153 M (22).
Assets Liabilities Investments SEK M 2016 2015 2016 2015 2016 2015 Acute Care Therapies 27,590 26,895 2,936 2,677 975 1,185 Patient & Post-Acute Care 12,006 10,982 1,743 1,747 325 556 Surgical Workflows 12,607 11,913 3,146 3,562 281 253 Total per business area 52,203 49,790 7,825 7,986 1,581 1,994 Undistributed 3,008 3,445 26,470 25,656 26 122 Total 55,211 53,235 34,295 33,642 1,607 2,116
GETINGE ANNUAL REPORT 2016 63 CONSOLIDATED FINANCIAL STATEMENTS
Intangible and Net sales tangible assets Geographic area, SEK M 2016 2015 2016 2015 EMEA 12,552 12,935 15,539 15,642 of which, Sweden 549 595 2,902 3,025 Americas 11,820 11,925 19,698 18,559 APAC 5,384 5,375 1,080 1,041 Total 29,756 30,235 36,317 35,242
Getinge’s operations are secondarily reported by geographic area. Refer also to page 92 for a list of the Group’s 20 largest markets. The geographic areas’ consolidation is conducted in accordance with the same policies as for the Group in its entirety.
NOTE 4 Costs by cost category NOTE 6 Exchange-rate gains and losses, net
Costs by cost category, SEK M 2016 2015 Exchange-rate differences were recognized in Salaries and remuneration –8,198 –8,122 profit and loss as follows, SEK M: 2016 2015 Social security expenses –1,411 –1,375 Other operating income and operating expenses 31 –21 Pension expenses –490 –504 Fincancial items 5 –3 Amortization and impairment of intangible assets –1,889 –1,471 Total 36 –24 Depreciation of tangible assets –814 –987 Goods and services –14,728 –14,806 Total –27,530 –27,265 NOTE 7 Interest income and other similar
Depreciation/amortization and impairment, income SEK M 2016 2015 Cost of goods sold –1,140 –1,092 SEK M 2016 2015 Selling expenses –807 –810 Interest income 17 23 Administrative expenses –428 –465 Currency gains 5 – Research and development costs –30 –91 Other 3 3 Restructuring and integration costs –298 – Total –2,703 –2,458 Total 25 26
NOTE 5 Auditing NOTE 8 Interest expenses and other similar expenses
Fee to PwC, SEK M 2016 2015 Fee and expense reimbursement: SEK M 2016 2015 Auditing assignments –26 –25 Interest expenses –617 –719 Auditing activities other than auditing Currency losses – –3 assignments –1 –1 Other –45 –36 Tax consultancy services –9 –5 Total –662 –758 Other services –2 –9 Total –38 –40
Öhrlings PricewaterhouseCoopers (PwC) is the entire Group’s auditor. Auditing assignments refer to statutory auditing, meaning assignments required to issue the auditor’s report. Auditing activities other than auditing assignments include the review of interim reports and services in conjunc- tion with the issuance of certificates and audit certificates. Tax consultancy services primarily pertain to general tax matters concerning corporate tax. Other services pertain to consultancy regarding financial accounting and services in conjunction with acquisitions.
64 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 Taxes NOTE 10 Dividend
Taxes, SEK M 2016 2015 On April 6, 2016, shareholders were paid a dividend of SEK 2.80 per share Current tax –545 –793 (SEK 667 M in total) relating to 2015. The Board and the CEO propose to the Annual General Meeting that a Deferred tax 108 253 dividend of SEK 2.00, which amounts to SEK 477 M. The proposed record Total –437 –540 date is March 31, 2017. Euroclear expects to be able to forward the dividend to shareholders on April 5, 2017.
The relationship between the year’s tax expense and the recognized profit before tax, SEK M 2016 2015 Recognized profit before tax 1,650 1,997 Tax according to current tax rate in Sweden (22%) –363 –439 NOTE 11 Earnings per share Adjustment of tax expenses from earlier years 52 73 Effects of non-deductible costs –68 –254 Earnings per share, before and after dillution, amounted to SEK 4.98 (5.83). Effects of non-taxable income 413 384 The calculation of earnings per share relating to the Parent Company’s Utilized loss carryforwards not previously shareholders is based on the following information: capitalized – 10 Changed value of temporary differences –296 1 Earnings (numerator) 2016 2015 Adjustment for tax rates in foreign subsidiaries –175 –315 Earnings relating to the Parent Compa- Recognized tax expense –437 –540 ny’s shareholders, which form the basis for calculation of earnings per share 1,188 1,390
Deferred tax assets relate to the following temporary differences and loss carryforwards, Number of shares (denominator) 2016 2015 SEK M 2016 2015 Weighted average number of ordinary Deferred tax assets relating to: shares for calculation of earnings per Non-current assets 382 135 share 238,323,377 238,323,377 Financial receivables and derivatives 300 123 Current assets 228 192 Provisions 711 509 Loss carryforwards 1,554 1,245 Other 389 424 Offsetting –2,331 –1,403 Deferred tax assets 1,233 1,225
Deferred tax liabilities relate to the following temporary differences, SEK M 2016 2015 Deferred tax liabilities relating to: Non-current assets –2,373 –1,924 Current assets –3 –2 Provisions –3 –2 Other –551 –549 Offsetting 2,331 1,403 Deferred tax liabilities –599 –1,074
Maturity structure for loss carryforwards, SEK M 2016 2015 Due within 1 year 2 – Due within 2 years – – Due within 3 years – – Due within 4 years – – Due within 5 years 7 18 Due in more than 5 years 23 – No due date 7,401 5,509 Total 7,433 5,527
At year-end 2016, there were unrecognized tax assets in an amount of SEK 299 M (46) pertaining to loss carryforwards and temporary differences.
GETINGE ANNUAL REPORT 2016 65 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 Intangible assets and tangible assets
Capitalized Technical Intangible INTANGIBLE Trade- develop- Customer know– Agree- assets, ASSETS Goodwill marks ment costs Patents relations how ments other* Cost, Jan 1, 2016 22,562 1,379 6,182 762 3,430 1,418 70 4,127 Investments – – 594 – – – – 325 Acquisition/divestment of operations 162 – – – 39 – – – Sales/disposals – – –243 – – – – –4 Reclassifications – – –118 3 –4 118 111 1,164 Translation differences 1,064 –20 173 61 206 92 5 257 Accumulated cost, Dec 31, 2016 23,788 1,359 6,588 826 3,671 1,628 186 5,869
Amortization and impairment, Jan 1, 2016 –764 –746 –2,343 –604 –2,011 –986 –62 –1,871 Amortization for the year – –94 –530 –69 –244 –104 –20 –530 Sales/disposals – – 194 – – – – 1 Impairment – – –181 – – – – –117 Reclassifications – – 21 –2 1 –22 –6 –383 Translation differences –32 11 –43 –54 –115 –65 – –141 Accumulated amortization and impairment, Dec 31, 2016 –796 –829 –2,882 –729 –2,369 –1,177 –88 –3,041 Closing carrying amount, Dec 31, 2016 22,992 530 3,706 97 1,302 451 98 2,828
Cost, Jan 1, 2015 21,836 1,360 5,358 814 3,291 1,370 214 3,659 Investments – 1 702 21 29 – – 278 Acquisition/divestment of operations –28 – – 9 – –11 –141 –23 Sales/disposals – – –81 – – – – –34 Reclassifications – –22 163 –127 –94 – – 80 Translation differences 754 40 40 45 204 59 –3 167 Accumulated cost, Dec 31, 2015 22,562 1,379 6,182 762 3,430 1,418 70 4,127
Amortization and impairment, Jan 1, 2015 –718 –644 –1,855 –547 –1,681 –839 –57 –1,497 Amortization for the year – –100 –523 –69 –251 –118 –5 –405 Acquisition/divestment of operations – – – – – – – 17 Sales/disposals – – 22 – –2 – – 34 Reclassifications – 22 5 39 –39 – – –27 Translation differences –46 –24 8 –27 –38 –29 – 7 Accumulated amortization and impairment, Dec 31, 2015 –764 –746 –2,343 –604 –2,011 –986 –62 –1,871 Closing carrying amount, Dec 31, 2015 21,798 633 3,839 158 1,419 432 8 2,256
* During the year some IT-related tangible assets have been reclassified to intangible assets with a retroactive effect from January 1, 2016. Corresponding figures for 2015 have not been reclassified.
66 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
Note 12, continued from preceding page
Equipment, Buildings Plant and tools, fixtures Equipment Construction TANGIBLE ASSETS and land* machinery and fittings** for lease in progress Cost, Jan 1, 2016 3,102 1,594 3,847 4,255 464 Investments 44 42 191 172 239 Acquisition/divestment of operations – 15 13 12 – Sales/disposals –4 –71 –94 –442 –1 Reclassifications 52 64 –1,038 468 –318 Translation differences 177 78 75 186 24 Accumulated cost, Dec 31, 2016 3,371 1,722 2,994 4,651 408
Depreciation and impairment, Jan 1, 2016 –1,389 –1,234 –2,314 –3,626 – Depreciation for the year –114 –96 –271 –333 – Acquisition/divestment of operations – –1 –6 – – Sales/disposals 3 64 86 404 – Reclassifications –5 3 380 –16 – Translation differences –80 –63 –82 –143 – Accumulated depreciation and impairment, Dec 31, 2016 –1,585 –1,327 –2,207 –3,714 – Closing carrying amount, Dec 31, 2016 1,786 395 787 937 408
Cost, Jan 1, 2015 2,958 1,894 3,604 4,564 668 Investments 89 48 369 306 273 Acquisition/divestment of operations –6 – –76 – – Sales/disposals –94 –398 –172 –693 – Reclassifications 122 46 114 12 –489 Translation differences 33 4 8 66 12 Accumulated cost, Dec 31, 2015 3,102 1,594 3,847 4,255 464
Depreciation and impairment, Jan 1, 2015 –1,316 –1,443 –2,103 –3,855 – Depreciation for the year –117 –111 –413 –346 – Sales/disposals 50 324 205 560 – Reclassifications 5 1 –6 42 – Translation differences –11 –5 3 –27 – Accumulated depreciation and impairment, Dec 31, 2015 –1,389 –1,234 –2,314 –3,626 – Closing carrying amount, Dec 31, 2015 1,713 360 1,533 629 464
* Closing carrying amount for land amounts to SEK 233 M (191) ** During the year some IT-related tangible assets have been reclassified to intangible assets with a retroactive effect from January 1, 2016. Corresponding figures for 2015 have not been reclassified.
Impairment test forecast, if the budget is out of date. Future cash flow has been assumed to have a growth rate corresponding to 2%. This growth is based on reasonable Goodwill and intangible assets with an prudence and does not exceed long-term growth for the industry as a whole. indefinite useful life. 2016 2015 A discount rate of 9.3% (9.6) before tax was applied when calculating the value in use for all business areas. With the assumptions described above, Surgical Workflows 2,983 2,612 value in use exceeds the carrying value for all cash generating units. Patient & Post-Acute Care 5,063 5,023 Acute Care Therapies 14,991 14,203 Sensitivity analysis In connection to the impairment test, sensitivity analyses have been per- Total 23,037 21,838 formed regarding changes in growth rate and discount interest rate, which have a significant impact on the calculation of the discounted cash flows. Goodwill and intangible assets with an indefinite useful life are distributed The sensitivity analyses showed that the below negative changes one and among the cash generating units (CGUs), which are identified per business each would not generate any need for impairment in any business area: area.
Goodwill and other net assets are tested for impairment annually and when- • The growth rate years 2 to 5 decreases to 1% ever conditions indicate that impairment may be necessary. The recover- • The growth rate after year 5 decreases to 1% able amount for CGUs is based on the calculated value in use. For impair- • The discount rate before tax increases by 1 percentage point to 10.3% ment-testing purposes, goodwill relating to acquisitions is allocated to the various business areas that are defined as separate CGUs. Intangible assets There are a limited number of intangible assets, in the form of trademarks Assumptions with a carrying amount of SEK 45 M (40), for which the useful life has been The value in use of goodwill and other net assets attributable to Surgical assessed as indeterminable. For these trademarks, there is no foreseeable Workflows, Patient & Post-Acute Care, and Acute Care Therapies was calcu- limit for the time period during which the trademarks are expected to gener- lated based on discounted cash flows. For the first year, the cash flow is ate net revenue for Getinge. The useful life for other intangible assets is 3 to based on the budget determined by the Board, or in certain instances, a 15 years. For strategic acquisitions, the useful life exceeds five years.
GETINGE ANNUAL REPORT 2016 67 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 Inventory Changes in provisions for doubtful receivables are as follows: SEK M 2016 2015 At January 1 –241 –241 SEK M 2016 2015 Provision for doubtful accounts –85 –45 Raw materials 1,538 1,999 Receivables written off during the year that Work in progress 473 406 cannot be recovered 22 11 Recovered doubtful receivables 45 30 Finished products 3,420 3,004 In new companies at acquisition date –12 –1 Total 5,431 5,409 Translation differences –20 5
Out of the inventory SEK 5,336 M (5,326) is measured at cost and SEK 95 M At December 31 –291 –241 (83) is measured at fair value less realizable value. At December 31, 2016, the Group’s provisions for obsolescence totaled SEK 982 M (864).
NOTE 15 Prepaid expenses and NOTE 14 Accounts receivable accrued income
SEK M 2016 2015 SEK M 2016 2015 Accounts receivable before provisions 8,450 7,711 Accrued income 429 421 Provisions for doubtful receivables –291 –241 Prepaid rental expenses 28 28 Total 8,159 7,470 Prepaid insurance expenses 36 51 Prepaid commissions 5 7 Accounts receivable net, after provisions for doubtful receivables, theoret- ically constitutes maximum exposure for the calculated risk of losses. Other 451 287 Accordingly, the carrying amount of accounts receivable represents the fair Total 949 794 value. It is the Group’s opinion that there is no significant concentration of accounts receivable to any single client. Letters of credit or the equivalent normally cover sales to countries outside the OECD.
A maturity analysis of these accounts receivable is presented below: SEK M 2016 2015 NOTE 16 Share capital Not fallen due 5,185 4,885 Fallen due 1–5 days 523 418 Class of shares A B Total Fallen due 6–30 days 609 643 Quotient value per share, SEK 0.50 0.50 Fallen due 31–60 days 455 400 Number of shares Fallen due 61–90 days 218 210 outstanding: Fallen due, more than 90 days 1,460 1,155 December 31, 2015 15,940,050 222,383,327 238,323,377 Total 8,450 7,711 December 31, 2016 15,940,050 222,383,327 238,323,377 Shares’ voting rights in % 41.8 58.2 100.0 At December 31, 2016, the Group’s provisions for doubtful receivables totaled SEK 291 M (241). A maturity analysis of these accounts receivable In accordance with the Articles of Association, the company’s share capital is presented below: amounts to not less than SEK 75 M and not more than SEK 300 M. Within these limits, the share capital can be raised or lowered without requiring an SEK M 2016 2015 amendment to the Articles of Association. The maximum number of shares Not fallen due –11 –8 is 600 million. One Class A share carries ten votes and one Class B share Fallen due 1–5 days –1 – carries one vote. Both classes of share have the same quotient value, which is SEK 0.50. At December 31, 2016, the company’s share capital totaled SEK Fallen due 6–30 days –1 –1 119 M (119). Fallen due 31–60 days –2 –3 Fallen due 61–90 days –1 –5 Fallen due, more than 90 days –275 –224 Total –291 –241 NOTE 17 Unutilized overdraft facilities and
Recognized amounts, by currency, for the Group’s accounts receivable are credit facilities as follows: SEK M 2016 2015 At December 31, 2016, the total granted, unutilized overdraft facilities were EUR 2,335 2,241 SEK 1,177 M (801). In addition, there were unutilized short-term credit facili- USD 2,918 2,724 ties of SEK 2,003 M (1,655) and committed, unutilized facilities for medium GBP 508 464 and long-term credit of SEK 5,567 M (3,837), which may be utilized without qualification. CAD 275 207 SEK 163 170 Other currencies 2,251 1,905 Total 8,450 7,711
68 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 The Group’s interest-bearing net debt
SEK M 2016 Change 2015 Interest-bearing current loans 5,787 510 5,277 Interest-bearing long-term loans 15,914 –92 16,006 Provision for pensions, interest-bearing 3,368 316 3,052 Less, cash and cash equivalents –1,680 –212 –1,468 Total 23,389 522 22,867
Liquidity risk. At December 31, 2016, the Group’s long-term interest-bearing loans amounted to SEK 15,914 M. Net debt is recognized with basis adjustments of negative SEK 728 M (neg: 504). The Group’s current interest-bearing loans totaled SEK 5,787 M and are covered by unutilized committed credit facilities of SEK 8,567 M. The average interest expense in terms of the Group’s liabilities to credit institutions amounts to approximately 2.5%.
The table below analyzes the Group’s financial liabilities and net-settled derivative instruments that comprise financial liabilities, subdivided into the peri- ods remaining on the closing date until the contractual agreed date of maturity. The amounts stated in the table comprise contractual, undiscounted cash flows.
At December 31, 2016, SEK M < 1 year 1–2 years 2–5 years > 5 years Bank loans and bond loans (including interest) –6,068 –9,052 –7,192 –193 Derivative instruments (net flows) –214 –247 –102 – Accounts payable –2,201 – – – Total –8,483 –9,299 –7,294 –193
NOTE 19 Leasing NOTE 20 Restructuring reserves
Operational leasing, SEK M 2016 2015 SEK M FDA Personnel Other Total Costs relating to operating leases –496 –497 Value according to opening balance 2015 525 85 39 649 Leasing costs for assets held via operating leases, such as leased premises, Provisions – 171 487 658 machinery, mainframe computers and office equipment, are recognized Utilized funds –332 –81 –504 –917 among operating expenses. Unutilized funds restored – –1 – –1 On the closing date, future leasing fees for non-cancellable leasing agreements Translation differences – 2 –2 – amounted to the following: 2016 2015 Value according to closing balance 2015 193 176 20 389 Due within 1 year –374 –426 Of which: Due within 2 to 5 years –753 –602 Short-term 230 Due in more than 5 years –125 –109 Long-term 159 Total –1,252 –1,137
Getinge as a lessor under operating leases: 2016 2015 Value according to opening balance 2016 193 176 20 389 Due within 1 year 10 11 Provisions 400 75 54 529 Due within 2 to 5 years 2 11 Utilized funds –235 –161 –20 –416 Total 12 22 Unutilized funds restored – – – – Translation differences 13 12 4 29 Value according to closing balance 2016 371 102 58 531 Of which: Short-term 378 Long-term 153
GETINGE ANNUAL REPORT 2016 69 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 Other provisions
SEK M Guarantees Personnel Other Total Value according to opening balance 2015 180 61 308 549 Provisions 109 22 209 340 Utilized funds –74 –25 –39 –138 Unutilized funds restored –28 –4 –6 –38 Translation differences –2 –2 6 2 Value according to closing balance 2015 185 52 478 715 Of which: Short-term 338 Long-term 377
Value according to opening balance 2016 185 52 478 715 Provisions 50 34 235 319 Utilized funds –105 –35 –198 –338 Unutilized funds restored –7 – –55 –62 Translation differences 4 2 35 41 Value according to closing balance 2016 127 53 495 675 Of which: Short-term 316 Long-term 359
Expected timing of outflow, SEK M Total Within 1 year 316 Within 3 years 299 Within 5 years 14 > 5 years 46 Value according to closing balance 2016 675
70 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 Provisions for pensions and similar obligations
Defined-contribution plans. In many countries, the Group’s employees are plans primarily comprise retirement pensions. Each employer normally has covered by defined-contribution pension plans. The pension plans primarily an obligation to pay a lifelong pension, earned according to the number of include retirement pensions. The premiums are paid continuously through- employment years. The employee must be affiliated with the plan for a cer- out the year by each Group company to separate legal entities, such as tain number of years to achieve full retirement pension entitlement. The insurance companies. The size of the premium paid by the company is nor- pension is financed through payments from the company and, in some mally based on a set proportion of the employee’s salary. cases, the employees. Pension commitments are usually calculated at year- end in line with actuarial methods. New calculations are made if substantial Defined-benefit plans. Getinge has defined-benefit pension plans in a num- changes occur during the year. Gains and losses on changed actuarial ber of countries, such as Sweden, Germany, the UK and the US. The pension assumptions are recognized as part of comprehensive income.
Funded Unfunded Dec 31, 2016 pension plans pension plans Total Present value of commitments –3,443 –2,746 –6,189 Fair value of plan assets 2,770 – 2,770 Net liability in the balance sheet –673 –2,746 –3,419
Funded Unfunded Dec 31, 2015 pension plans pension plans Total Present value of commitments –3,321 –2,331 –5,652 Fair value of plan assets 2,535 – 2,535 Net liability in the balance sheet –786 –2,331 –3,117
Group, SEK M 2016 2015 Pension commitments Opening balance –3,117 –3,333 Costs for service in the current year –59 –61 Net interest expenses –82 –102 Costs for service in previous years – – Administrative costs pertaining to plan assets –1 – Gains and losses from settlements 8 167 Return on plan assets 298 13 Gain/(loss) attributable to changed demographic assumptions 22 160 Gain/(loss) attributable to changed financial assumptions –615 –232 Experience-based gains/(losses) 2 26 Special salary tax on actuarial assumptions –16 10 Restriction in plan surpluses with regard to asset ceilings 29 – Exchange-rate differences –171 17 Fees paid by employer 186 160 Fees paid by employees covered under the plan – –6 Paid benefits 97 64 Closing balance –3,419 –3,117
The defined-benefit pension commitment Present value of Fair value Net pension and composition of plan assets commitment of plan assets liability Sweden –569 76 –493 Germany –2,117 4 –2,113 UK –1,850 1,899 49 USA –1,545 788 –757 Other countries –108 3 –105 Total –6,189 2,770 –3,419
GETINGE ANNUAL REPORT 2016 71 CONSOLIDATED FINANCIAL STATEMENTS
Note 22, continued from preceding page
Significant actuarial assumptions 2016 2015 Weighted average, % Discount rate 2.5 3.1 Expected salary increase rate 2.5 2.8 Expected inflation 3.0 2.2 Other Significant actuarial assumptions 2016 Germany UK countries Weighted average, % Discount rate 1.6 3.0 3.0 Expected salary increase rate 2.5 2.0 2.9 Expected inflation 1.2 3.7 4.0
Change com- Expected value pared to used Sensitivity of defined-benefit commitments to changes in the significant for pension assumptions in weighted assumptions for 2016 commitment valuation Pension commitment originally used in valuation –6,189 Discount rate +1 percentage points –5,296 893 Inflation +1 percentage points –6,845 –656 Salary increases +1 percentage points –6,310 –121
The sensitivity analyses above are based on a change in an assumption, while all other assumptions remain constant. It is unlikely that this will happen in practice, and changes in some of the assumptions may correlate. The calculation of sensitivity in the defined-benefit commitments for material actuarial assumptions uses the same method (the present value of defined-benefit commitments by applying the Projected Unit Credit Method at the end of the reporting period) as that used in the calculation of pension liabilities.
Composition of plan assets 2016 2015 Equities 1,897 1,595 Financial instruments 237 193 Properties 34 48 Cash and cash equivalents and similar assets 76 105 Other 526 594 Total 2,770 2,535
All plan assets are listed. The weighted average term of the pension commitments is 18 years.
Information regarding recognition of multi-employer defined-benefit pension plans The commitment for retirement pensions and family pensions for salaried employees in Sweden is safeguarded through insurance with Alecta. According to a statement from the Swedish Financial Reporting Board, UFR 10, this is a multi-employer defined-benefit plan. For the 2016 financial year, the company did not have access to such information that makes it possible to recognize this plan as a defined-benefit plan. The pension plan in accordance with ITP, which is safeguarded through insurance with Alecta, is thus recognized as a defined-contribution plan. During the year, fees for pension insurance covered by Alecta amounted to SEK 29 M (21). Alecta’s surplus can be distributed to the insurers and/or the insured. At year-end 2016, Alecta’s surplus in the form of the collective consolidation level was approximately 149% (153). The collective consolidation level comprises the market value of Alecta’s assets as a percentage of the insurance commitment calculated in accordance with Alecta’s actuarial calculation assumption, which does not correspond with IAS 19.
NOTE 23 Accrued expenses and NOTE 24 Pledged assets and deferred income contingent liabilities
SEK M 2016 2015 Pledged assets The Group has no pledged assets. Salaries 1,199 1,157 Social security expenses 305 289 Commissions 187 139 Contingent liabilities, SEK M 2016 2015 Interest expenses 51 61 Guarantees 146 255 Consultancy fees 23 31 Other 57 5 Other deferred income 295 334 Total 203 260 Other 936 876 Total 2,996 2,887
72 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 25 Acquired operations
Net assets acquired, SEK M 2016 2015 Intangible assets 39 9 Tangible assets 33 – Inventory 27 2 Other current assets 14 7 Cash and cash equivalents 47 3 Deferred tax liabilities –7 –9 Other current liabilities –16 –6 Identifiable net assets 137 6 Goodwill 162 38 Total purchase consideration 299 44
Less: Unpaid purchase considerations –40 – Cash and cash equivalents in the acquired companies –47 –3 Impact on the Group’s cash and cash equivalents 212 41
ACCUMED The acquisition of AccuMed was completed in April 2016. Under the acquisition, Getinge will obtain a manufacturing unit for the production of medical textiles in the Dominican Republic. The operations have about 400 employees and the total purchase consideration amounted to SEK 66 M. The goodwill arising in connection with the acquisition amounted to SEK 29 M and was attributable to future integration synergies for production. Acquisition expenses of SEK 1.0 M were charged to earnings.
Net assets acquired, SEK M Carrying amount Tangible assets 16 Inventory 22 Other current liabilities –1 Identifiable net assets 37 Goodwill 29 Total purchase consideration 66
Less: Cash and cash equivalents in the acquired company 0 Impact on the Group’s cash and cash equivalents 66 The operation was included in Getinge’s consolidated financial statements on April 1, 2016.
1ST CALL MOBILITY LIMITED All of the shares in the UK company 1st Call Mobility Limited were acquired during the second quarter. The company is specialized in medical-device solu- tions for bariatric patients, generates sales of approximately SEK 100 M and has 48 employees. The total purchase consideration amounted to SEK 233 M and the goodwill arising in connection with the acquisition amounted to SEK 133 M and was primarily attributable to geographical spread. Acquisition expenses of SEK 1.6 M were charged to earnings.
Net assets, SEK M Carrying amount Intangible assets 39 Tangible assets 17 Inventory 5 Other current assets 14 Cash and cash equivalents 47 Deferred tax liabilities –7 Other current liabilities –15 Identifiable net assets 100 Goodwill 133 Total purchase consideration 233 Less: Unpaid purchase considerations –40 Cash and cash equivalents in the acquired company –47 Impact on the Group’s cash and cash equivalents 146
The operation was included in Getinge’s consolidated financial statements on June 10, 2016.
GETINGE ANNUAL REPORT 2016 73 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 26 Financial risk management
Most of Getinge’s operations are located outside Sweden. This situation Financing and liquidity risk entails exposure to different types of financial risks that may cause fluctua- Financing risk is defined as the risk of the cost being higher and financing tions in net profit for the year, cash flow and shareholders’ equity due to opportunities limited as the loan is renegotiated and that the ability to pay changes in exchange rates and interest rates. In addition, the Group is cannot be met as a result of insufficient liquidity or difficulties in securing exposed to refinancing and counterparty risks. The primary role of the Par- funding. The Group’s cash and cash equivalents are invested short-term ent Company’s treasury function is to support business activities and to with the aim that any excess cash balances are to be used for amortizing identify and in the best way manage the Group’s financial risks in line with loans. The finance policy of the Group states that refinancing risks are man- the Board’s established finance policy. Getinge’s financial activities are cen- aged by signing long-term committed credit agreements. The single largest tralized to benefit from economies of scale, to ensure good internal control loan is a syndicated loan agreement of EUR 1,062 M with nine banks. A minor and to facilitate monitoring of risk. portion of this loan agreement falls due in July 2017, and the major portion in July 2018. In 2012, the Group established an MTN program with the aim of Currency risks issuing bonds in the Swedish market. At year-end 2016, SEK 2,000 M was Currency risks comprise exchange-rate fluctuations, which have an impact outstanding under this loan program. The Group signed a bilateral loan on the Group’s earnings and shareholders’ equity. Currency exposure agreement with Intesa Sanpaolo during the year. The loan volume is EUR occurs in connection with payments in foreign currency (transaction expo- 100 M and the loan expires in 2019. The Group also refinanced and extended sure) and when translating foreign subsidiaries’ balance sheets and income loans of USD 200 M and EUR 140 M with existing lenders during the year. statements into SEK (translation exposure). For a sensitivity analysis, see In addition to these credit facilities, the Group has short-term uncommit- page 44 in the Administration Report. The effect of exchange-rate fluctua- ted credit lines. For further information on credit lines, refer to Note 17. tions on earnings calculated using forecast volumes and earnings in foreign At December 31, 2016, the Group’s borrowings were well in line with the currencies is presented on page 44 of the Administration Report. requirements under Getinge’s finance policy pertaining to diversification of lenders and maturity dates. Transaction exposure. Payment flows as a result of sales income and cost of goods sold in foreign currencies cause currency exposure that affects Credit and counterparty risks Group earnings in the event of exchange-rate fluctuations. The Group’s pay- The Group’s financial transactions cause credit risks with regard to financial ment flows in foreign currencies consists mainly of the income generated by counterparties. Credit risks or counterparty risks constitute the risk of export sales. The most important currencies are USD, EUR, GBP, PLN and losses if the counterparties do not fully meet their commitments. Getinge’s JPY. In line with Getinge’s finance policy, the forecast flows in foreign cur- finance policy states that the credit risk must be limited through accepting rency are hedged up to 90% for the next financial year. Getinge has the right only creditworthy counterparties and fixed limits. At December 31, 2016, the to hedge for up to 42 months. Hedging is conducted using currency futures, total counterparty exposure in derivative instruments was SEK 0 M (2). currency swaps and currency options. The market value of financial cur- Credit risks in outstanding derivatives are limited by the offset rules agreed rency derivatives that meet cash-flow hedging requirements, which are rec- with the respective counterparty. The Group’s liquidity is placed in bank ognized in other comprehensive income (OCI), amounted to a negative SEK accounts with negligible credit risks. Commercial credit risks are limited by 186 M (neg: 206) at December 31, 2016. a diverse customer base with a high credit rating. A provision was made for the part of accounts receivable considered to be at risk and this affected Translation exposure — income statement. When translating the results of operating profit. foreign subsidiaries into SEK, currency exposure occurs, which affects the Group’s earnings when exchange rates fluctuate. Financial derivatives. Getinge uses financial derivatives to manage interest and currency exposure arising in its business. At December 31, 2016, all Translation exposure — balance sheet. Currency exposure occurs when financial instruments outstanding were held for hedging purposes and were translating net assets of foreign subsidiaries into SEK, which affect the con- deemed to be efficient. Consequently, hedge accounting was applied for solidated OCI. In accordance with the Group’s finance policy, to minimize these. All recognized derivatives are classified under level 2 of the value the effects of this translation, the exposure arising is hedged using loans or hierarchy. Fair value measurements for currency forward contracts are currency derivatives in the subsidiary’s local currency. The market value of based on published forward rates in an active market. The measurement of financial derivatives that meet hedge-accounting requirements, which are interest-rate swaps is based on forward rates as expressed in market yield recognized in OCI, amounted to a negative SEK 728 M (neg: 504) at Decem- curves. ber 31, 2016. Fair value disclosures pertaining to borrowing and other financial instru- Interest-rate risk ments. Essentially, all loans have floating interest rates and, accordingly, Interest-rate risks are the changes in market interest rates that affect the the fair value is assessed as corresponding to the carrying amount. For Group’s net interest. How quickly interest-rate changes impact net interest other financial assets and liabilities, fair value is assessed as corresponding depends on the fixed-interest term of the loans. At December 31, 2016, the to the carrying amount due to the short expected maturity in time. average fixed-interest term in the loan portfolio was about 18 months. Inter- est-rate derivatives, such as interest-rate swaps, are used to achieve the Offsetting of financial derivatives. The Group has ISDA agreements for all desired fixed-interest term for borrowings. If the average interest rate for of its significant counterparties for raising funds and trading in financial currencies represented in the Group’s loan portfolio at the end of the year instruments. For the financial assets and liabilities that are subject to changed instantaneously by 1 percentage point, this would affect profits by legally binding offset agreements or similar, each agreement between the +/- SEK 66 M on an annual basis. The market value of financial interest-rate company and its counterparties permits the relevant financial assets and derivative instruments that meet cash-flow hedging requirements, which liabilities to be offset. are recognized in OCI, amounted to a negative SEK 423 M (neg: 487) at The Group has netted the value of the Group’s basis swaps against loans December 31, 2016. For further information on liquidity flows attributable to in the balance sheet. interest-bearing liabilities, refer to Note 18.
2016 2015 Nominal Nominal Outstanding derivative instruments, SEK M amount Fair value amount Fair value Interest/currency derivatives* 2,000 –728 2,000 –504 Interest-rate derivatives 16,656 –423 15,730 –487 Currency derivatives 6,077 –186 7,901 –206 Total 24,733 –1,337 25,631 –1,197
*Combined instruments
74 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
Note 26, continued from preceding page
2016 2015 SEK M Asset Liability Asset Liability Interest-rate derivatives – cash-flow hedges – 423 – 487 Interest-rate derivatives – fair-value hedges* – 728 – 504 Currency derivatives – cash-flow hedges 191 377 238 444 Total 191 1,528 238 1,435 Of which, short-term 166 800 158 931 Of which, long-term 25 728 80 504
* Combined instruments are recognized in the company’s net liabilities.
The fair value of derivative instruments is established using valuation techniques. For this purpose, observable market information is used. All derivatives are classified under level 2 of the value hierarchy.
Loan and Assets at Derivatives accounts fair value through used for Available-for-sale Financial instruments by category receivable profit and loss hedging purposes financial assets Total Financial assets 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Available-for-sale financial assets – – – – – – – – – – Derivative instruments – – – – 191 238 – – 191 238 Accounts receivable and other receivables 8,159 7,470 – – – – – – 8,159 7,470 Financial assets at fair value through profit and loss – – – – – – – – – – Cash and cash equivalents 1,680 1,468 – – – – – – 1,680 1,468 Total 9,839 8,938 – – 191 238 – – 10,030 9,176
Liabilities at Derivatives fair value through used for Other profit and loss hedging purposes financial liabilities Total Financial liabilities 2016 2015 2016 2015 2016 2015 2016 2015 Borrowing – – 728 504 20,973 20,779 21,701 21,283 Derivative instruments – – 800 931 – – 800 931 Accounts payable and other financial liabilities – – – – 2,201 1,986 2,201 1,986 Total – – 1,528 1,435 23,174 22,765 24,702 24,200
Distribution of currency for outstanding derivative instruments in 2016 Distribution of currency for outstanding derivative instruments in 2015 AUD 545 GBP 97 SEK 3,800 AUD 862 GBP 1,184 SEK 3,500 CAD 361 HKD 4 SGD 2 CAD 669 HKD 8 SGD – CHF 17 JPY 430 THB 3 CHF 139 JPY 450 THB – CNY 264 MXN 1 TRY 10 CNY – MXN – TRY – CZK 2 NOK 3 USD 13,937 CZK – NOK – USD 13,282 DKK 10 NZD 1 ZAR 4 DKK – NZD – ZAR – EUR 4,527 PLN 715 EUR 4,001 PLN 1,536 Total, SEK M 24,733 Total, SEK M 25,631
Maturity structure of outstanding derivative instruments (SEK M) Maturity structure of outstanding derivative instruments (SEK M) in 2016 in 2015 2017 2018 2019 2020 2021 Total 2016 2017 2018 2019 2020 Total Interest/currency Interest/currency derivatives* – 2,000 – – – 2,000 derivatives* – – 2,000 – – 2,000 Interest-rate Interest-rate derivatives 300 12,237 4,119 – – 16,656 derivatives 124 371 11,270 3,965 – 15,730 Currency derivatives 4,086 1,716 275 – – 6,077 Currency derivatives 5,118 2,643 140 – – 7,901 Total 4,386 15,953 4,394 – – 24,733 Total 5,242 3,014 13,410 3,965 – 25,631
The table refers to net flows The table refers to net flows *Combined instruments *Combined instruments
GETINGE ANNUAL REPORT 2016 75 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 27 Employee costs
2016 2015 Board Board Group, SEK M and CEO Other Total and CEO Other Total Salaries and remuneration 287 7,911 8,198 385 7,737 8,122 Social security expenses 55 1,356 1,411 55 1,320 1,375 Pension expenses 31 459 490 31 473 504 Total 373 9,726 10,099 471 9,530 10,001
Salaries and remuneration per country 2016 2015 of of Board which, Board which, Group, SEK M and CEO bonus Other Total and CEO bonus Other Total Australia 6 1 225 231 11 2 231 242 Belgium 1 – 70 71 3 1 75 78 Brazil 5 2 30 35 14 5 29 43 Colombia – – 11 11 4 1 5 9 Costa Rica – – 14 14 – – – – Denmark 6 1 140 146 13 1 103 116 Dominican Republic – – 1 1 – – – – Finland – – 18 18 1 – 17 18 France 29 6 565 594 28 5 491 519 United Arab Emirates 4 1 40 44 7 1 39 46 Netherlands 6 1 121 127 9 1 117 126 Hong Kong 10 3 31 41 11 5 24 35 India 3 1 31 34 6 2 32 38 Ireland – – 19 19 – – 37 37 Italy 3 1 121 124 4 1 121 125 Japan 7 2 135 142 13 5 119 132 Canada 16 4 197 213 17 4 171 188 China 6 1 155 161 9 1 158 167 Mexico 2 – 8 10 – – 10 10 Norway – – 24 24 1 – 23 24 New Zealand 1 – 12 13 1 – 16 17 Poland 10 1 135 145 8 1 119 127 Portugal – – 12 12 1 – 9 10 Russia 1 – 12 13 1 – 12 13 Switzerland 5 1 73 78 – – 65 65 Serbia 3 1 3 6 3 – 3 6 Singapore 4 1 43 47 7 2 35 42 Slovakia – – 1 1 1 – – 1 Spain 2 1 54 56 3 1 42 45 UK 14 3 580 594 40 8 520 560 Sweden 72 4 768 840 63 6 708 771 South Africa 2 1 15 17 2 1 4 6 South Korea 1 – 6 7 – – 8 8 Taiwan 1 – 7 8 1 – 7 8 Thailand 2 – 14 16 1 – 15 16 Czech Republic 4 1 7 11 2 – 8 10 Turkey 8 2 66 74 7 2 62 69 Germany 32 8 1,200 1,232 32 8 1,285 1,317 USA 14 3 2,891 2,905 53 16 2,950 3,003 Austria 7 2 56 63 8 2 67 75 Total 287 53 7,911 8,198 385 82 7,737 8,122
76 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTS
Note 27, continued from preceding page
Variable Other Remuneration and other benefits remune Other Pension remune during 2016, SEK 000s Board fee* Basic pay ration benefits expenses ration Total Chairman of the Board 1,275 – – – – – 1,275 Board members 4,993 – – – – – 4,993 Joacim Lindoff, Acting CEO (from 22 August 2016) – 2,681 – 77 434 – 3,192 Alex Myers, former CEO (until 22 August 2016) – 14,000 – 126 5,600 45,150 64,876 Other senior executives – 37,010 15,985 2,560 6,053 16,780 78,388 Total 6,268 53,691 15,985 2,763 12,087 61,930 152,724
* Also includes fees for work on Board Committees
Comments on the table • Variable remuneration refers to the 2016 financial year’s expensed bonus, • Other senior executives pertains remunerations to members in the Get- which will be paid in 2017. inge Executive Team, other than the acting CEO and the former CEO (11 • Other benefits refer to company car, accommodation benefits, etc. individuals). Only remunerations that have been received as a member of • For information on Board fees for each member, refer to page 48. the executive team are included in the amounts, which comprises per- • Other remuneration pertains mainly to contractual severance pay and sons that has joined and left the executive team during the year. termination pay.
Variable Remuneration and other benefits remune Other Pension during 2015, SEK 000s Board fee* Basic pay ration benefits expenses Total Chairman of the Board 1,225 – – – – 1,225 Board members 4,176 – – – – 4,176 Johan Malmquist, CEO (until March 25, 2015) – 5,500 – 25 8,230 13,755 Alex Myers, CEO (from March 25, 2015) – 15,493 – 88 6,194 21,775 Other senior executives ** – 18,868 17,961 838 8,490 46,157 Total 5,401 39,861 17,961 951 22,914 87,088
* Also includes fees for work on Board Committees ** Five individuals
Remuneration to senior executives mining bonuses, allotment and the size of the pension conditions and sever- Principles: The Annual General Meeting decides on remuneration to the ance pay. The Board discussed the Remuneration Committee’s proposals Chairman of the Board and Board members. Employee representatives do and decided in line with the Remuneration Committee’s recommendations. not receive Board remuneration. Remuneration to the CEO and other senior Remuneration to the CEO for the 2016 financial year was decided by the executives comprises basic pay, variable remuneration, other benefits as Board taking into account the Remuneration Committee’s recommenda- well as pensions. Other senior executives comprise the individuals, who tions. together with the CEO, comprise the Getinge Executive Team. For the Get- inge Executive Team structure, see pages 52–53. The allocation between Remuneration to other senior executives was decided by the CEO in consul- basic pay and variable remuneration should be proportionate to the execu- tation with the Chairman of the Board. During 2016, the Remuneration Com- tive’s responsibility and authority. The CEO’s variable remuneration is a mittee was convened on three occasions. The committee’s work was con- maximum of 80% of basic pay. Other senior executives’ variable remunera- ducted with the support of external experts in issues concerning tion is based on results in relation to individually set targets. remuneration levels and structures.
Bonus: The acting CEO’s bonus for 2016 was based on the individual goals Long-term incentive program 2016 set by the Board. For other senior executives, bonuses for 2016 were based The 2016 AGM resolved to implement a long-term incentive program (LTIP on a combination of the result of the individual’s area of responsibility and 2016). The program includes the CEO and the Getinge Executive Team com- individual goals. prising 11 individuals, as well as maximum 75 additional senior executives Pensions: The acting CEO is entitled to a pension from the age of 65. The and key individuals in Getinge Group. LTIP 2016 means that the participants pension is premium based and pension expenses amount to 16% of basic are entitled to receive performance shares, free of charge, if the perfor- pay. For other senior executives, pension ages vary between the ages of 62 mance target has been achieved during the performance period (2016– and 65. Pension agreements have been signed in accordance with local leg- 2018). The allocation of performance shares is based on minimum and ceil- islation in the country where the executive resides. All pension benefits are ing target levels respectively, as set by the Board, with regard to the transferable, i.e. not conditional on future employment. accumulated development of earnings per share during the performance period. The accumulated earnings per share during the performance period Severance pay:The period of notice for the acting CEO is a minimum of six must reach SEK 33 per share. The minimum level for allocation of perfor- months. If termination of employment is initiated by the company then sev- mance shares is a minimum of 90% fulfillment of the performance target erance pay of 12 months’ pay will be awarded. Severance pay is not offset and the ceiling for allocation is if the performance target is exceeded by 10% against any other income. Upon termination of employment of any other or more. senior executives, they have the right to severance pay of a minimum of six Should the maximum number of performance shares be allocated, the months and a maximum of one year. total number of shares in LTIP 2016 will amount to 439,390 Class B Getinge shares. The total cost for LTIP 2016, including social security contributions, Drafting and decision-making process: During the year, the Remuneration Committee gave the Board its recommendations concerning policies for the under the three-year program period, is estimated at SEK 94 M, if the perfor- remuneration to senior executives. The recommendations included the pro- mance target is met in full. The impact on earnings in 2016 was SEK 9 M portion between fixed and variable remuneration and the size of possible pay including social security contributions. increases. The Remuneration Committee also proposed criteria for deter-
GETINGE ANNUAL REPORT 2016 77 CONSOLIDATED FINANCIAL STATEMENTS
NOTE 28 Average number of employees NOTE 29 Transactions with related parties
2016 2015 Transactions between Getinge AB and its subsidiaries, which are related Men Women Total Men Women Total companies to Getinge AB, were eliminated in the consolidated financial statements. Australia 283 128 411 275 122 397 Belgium 100 33 133 105 32 137 Transactions with related parties Brazil 62 53 115 83 41 124 Business terms and conditions as well as market-regulated pricing apply for delivery of products and services between Group companies. Colombia 17 10 27 17 9 26 In 2016, intra-Group sales amounted to SEK 19,332 M (19,554). No Board Costa Rica 40 29 69 – – – member or senior executive has, or has had, any direct or indirect participa- Denmark 143 49 192 121 56 177 tion in any business transactions, between themselves and the company, that are or were unusual in character, regarding terms or conditions. Dominican From Carl Bennet AB SEK 671 T (986) has been invoiced in respect of costs Republic 99 353 452 – – – for Carl Bennet related to the assignment as Chairman of the Board. Finland 21 9 30 23 10 33 During the year, the pension plan for Johan Malmquist, Board member France 911 488 1,399 856 434 1,290 and former CEO, was changed to be premium-based instead of defined ben- United efit-based. The change has not resulted in any costs for the Group. Arab Emirates 52 24 76 43 18 61 In addition, no other transactions with related parties occurred. For remuneration and benefits to individuals in management positions and on Netherlands 162 79 241 174 77 251 the Board of Directors, see Note 27. Hong Kong 37 22 59 37 23 60 India 224 57 281 358 57 415 Ireland 78 21 99 76 20 96 Italy 184 84 268 189 85 274 NOTE 30 Events after the end of Japan 173 44 217 209 55 264 Canada 293 139 432 307 164 471 the financial year China 561 271 832 666 300 966 Mexico 28 13 41 23 10 33 On February 22 it was announced that Barbro Fridén, Dan Frohm and Sofia Norway 32 6 38 30 8 38 Hasselberg are proposed, together with the incoming President and CEO Mattias Perjos, to be elected to the board at the Annual General Meeting on New Zealand 25 5 30 25 7 32 March 29. Carola Lemne and Maths Wahlström have declined reelection. Poland 428 651 1,079 416 581 997 Portugal 16 6 22 16 6 22 Russia 31 16 47 29 16 45 Switzerland 74 23 97 71 21 92 NOTE 31 Supplementary disclosures to Serbia 12 6 18 8 6 14 Singapore 64 33 97 50 28 78 the cash-flow statement Slovakia 2 1 3 2 1 3 Spain 60 31 91 51 32 83 Cash and cash equivalents, SEK M 2016 2015 UK 907 377 1,284 910 362 1,272 Investments 15 10 Sweden 856 405 1,261 973 367 1,340 Cash and bank 1,665 1,458 South Africa 61 42 103 79 43 122 Total 1,680 1,468 South Korea 8 6 14 9 7 16 Taiwan 17 11 28 19 10 29 Adjustments for items not included in Thailand 43 34 77 40 36 76 cash flow, SEK M 2016 2015 Czech Gain from divestment/disposal of Republic 18 22 40 28 9 37 non-current assets 85 198 Turkey 231 237 468 213 239 452 Gain from divestment of operations – 32 Germany 1,388 666 2,054 1,529 726 2,255 Total 85 230 USA 2,144 1,028 3,172 2,269 1,079 3,348 Austria 127 19 146 114 25 139 Total 10,012 5,531 15,543 10,443 5,122 15,565 NOTE 32 Capitalized development costs Distribution of senior executives and Board members at the closing date, % 2016 2015 SEK M 2016 2015 Women: Development costs, gross –1,265 –1,300 Board members 30% 30% Capitalized development costs 594 702 Other members of the company’s management, Development costs, net –671 –598 incl. CEO 25% 25% Men: Board members 70% 70% Other members of the company’s management, incl. CEO 75% 75%
78 GETINGE ANNUAL REPORT 2016 PARENT COMPANY FINANCIAL STATEMENTS
Parent Company financial statements
Parent Company’s income statement
SEK M Note 2016 2015 Administrative expenses 2 –164 –261 Operating result 16, 17 –164 –261 Result from participations in Group companies 5 2,514 3,459 Interest income and other similar income 6 164 248 Interest expenses and other similar expenses 7 –2,370 –1,287 Profit after financial items 144 2,159 Taxes 8 78 –74 Net profit for the year 222 2,085
Parent Company’s statement of comprehensive income
SEK M Note 2016 2015 Net profit for the year 222 2,085
Other comprehensive income Cash-flow hedges –4 – Tax attributable to cash-flow hedges 1 – Other comprehensive loss for the period, net after tax –3 – Total comprehensive income for the period 219 2,085
GETINGE ANNUAL REPORT 2016 79 PARENT COMPANY FINANCIAL STATEMENTS
Parent Company’s balance sheet
SEK M Note 2016 2015 ASSETS Non-current assets Intangible assets 2, 3 104 101 Tangible assets 2, 4 3 3 Participations in Group companies 9 25,024 25,112 Deferred tax assets 222 54 Total non-current assets 25,353 25,270
Current assets Receivables from Group companies 7,160 8,333 Current tax assets 1 22 Other receivables 75 – Prepaid expenses and accrued income 12 64 48 Cash and cash equivalents 0 0 Total current assets 7,300 8,403 TOTAL ASSETS 32,653 33,673
SHAREHOLDERS’ EQUITY AND LIABILITIES Shareholders’ equity 18 Restricted shareholders’ equity Share capital 119 119 Statutory reserve 2,525 2,525 Non-restricted shareholders’ equity Share premium reserve 3,435 3,435 Retained earnings 3,259 1,836 Net profit for the year 222 2,085 Total shareholders’ equity 9,560 10,000
Long-term liabilities Interest-bearing long-term loans 10 15,851 15,929 Total long-term liabilities 15,851 15,929
Current liabilities Interest-bearing current loans 11 5,646 5,147 Accounts payable 35 30 Liabilities to Group companies 1,351 2,396 Current tax liabilities 8 – Other liabilities 2 3 Accrued expenses and deferred income 13 200 168 Total current liabilities 7,242 7,744 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 32,653 33,673
For information about pledged assets and contingent liabilities, refer to Note 14.
80 GETINGE ANNUAL REPORT 2016 PARENT COMPANY FINANCIAL STATEMENTS
Changes in Parent Company shareholders’ equity
Restricted Non-restricted shareholders’ equity shareholders’ equity Retained Share earnings and Total Statutory premium net profit shareholders’ SEK M Share capital reserve reserve for the year equity Opening balance at January 1, 2015 119 2,525 3,435 2,503 8,582 Total comprehensive income for the period – – – 2,085 2,085 Dividend – – – –667 –667 Closing balance at December 31, 2015 119 2,525 3,435 3,921 10,000
Opening balance at January 1, 2016 119 2,525 3,435 3,921 10,000 Total comprehensive income for the period – – – 219 219 Share-based remuneration – – – 8 8 Dividend – – – –667 –667 Closing balance at December 31, 2016 119 2,525 3,435 3,481 9,560
Each share’s quotient value is SEK 0.50. The share capital consists of 15,940,050 Class A shares carrying ten voting rights per share and 222,383,327 Class B shares carrying one voting right per share, totaling 238,323,377 shares.
Parent Company cash flow statement
SEK M Note 2016 2015 Operating activities Operating result –164 –261 Adjustments for items not included in cash flow 23 19 Interest received and similar items 164 248 Dividend received 168 1,890 Interest paid and similar items –2,383 –1,293 Taxes paid –61 –94 Cash flow before changes to working capital –2,253 509
Changes in working capital Current receivables 1,976 –4,672 Current liabilities 1,330 –54 Cash flow from operating activities 1,053 –4,217
Investing activities Investments in intangible assets 3 –25 –78 Investments in tangible assets 4 –1 – Investments in subsidiaries –21 –243 Cash flow from investing activities –47 –321
Financing activities Change in interest-bearing loans –1,908 779 Dividend paid –667 –667 Group contributions received 1,569 3,625 Cash flow from financing activities –1,006 3,737
Cash flow for the year 0 –801
Cash and cash equivalents at the beginning of the year 0 801 Cash flow for the year 0 –801 Cash and cash equivalents at year-end 0 0
GETINGE ANNUAL REPORT 2016 81 PARENT COMPANY FINANCIAL STATEMENTS
NOTE 1 Accounting policies NOTE 5 Result from participations
The financial statements of the Parent Company were prepared in accordance in Group companies with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board’s recommendation RFR 2, Reporting of Legal Entities. In accordance with the regulations stipulated in RFR 2, in the annual financial statements for SEK M 2016 2015 a legal entity, the Parent Company is to apply all of the IFRS/IAS regulations Dividends from Group companies 168 1,890 and statements that have been endorsed by the EU where possible within the Divestment of subsidiaries 12 – framework of the Swedish Annual Accounts Act and with consideration of the link between accounting and taxation. The recommendation specifies which Impairment of shares in Group companies –93 – exceptions are to be made from IFRS/IAS. Provisions conforming to IFRS/IAS Group contributions 2,427 1,569 are stated in Note 1 Accounting policies, for the consolidated financial state- ments. The Parent Company applies the accounting policies detailed for the Total 2,514 3,459 Group with the exception of the following:
Remunerations to employees. The Parent Company complies with the Swedish Pension Obligations Vesting Act and directives from the Swedish NOTE 6 Interest income and Financial Supervisory Authority when calculating defined benefit pension plans. other similar income Financial derivatives. The Parent Company applies hedge accounting for currency and interest rate swaps in accordance with IAS 39. For other deriv- SEK M 2016 2015 atives, the exemption in RFR 2 pertaining to IAS 39 is applied, meaning that measurement and recognition of financial instruments is based on cost pur- Interest income from Group companies 163 242 suant to the Swedish Annual Accounts Act. Interest income 1 6 Shares and participations. Subsidiaries are recognized in accordance with Total 164 248 the acquisition method, implying that holdings are recognized at cost in the balance sheet less any impairment. Dividends from subsidiaries are recog- nized as dividend income. NOTE 7 Interest expenses and other similar expenses NOTE 2 Depreciation/amortization according to plan SEK M 2016 2015 Interest expenses to Group companies –3 –7 Interest expenses –538 –627 SEK M 2016 2015 Currency losses –1,803 –631 Equipment, tools, fixtures and fittings –1 0 Other –26 –22 Intangible assets –22 –19 Total –2,370 –1,287 Total –23 –19
Depreciation/amortization is recognized as administrative expenses –23 –19 NOTE 8 Taxes
NOTE 3 Intangible assets Tax, SEK M 2016 2015 Current tax –90 –85 Intangible assets, SEK M 2016 2015 Deferred tax 168 11 Opening cost 227 149 Total 78 –74 Investments 25 78 Relationship between the year’s tax expenses Closing accumulated cost 252 227 and the recognized profit before tax, SEK M: Opening amortization –126 –107 Recognized profit before tax 144 2,159 Amortization for the year –22 –19 Tax according to current tax rate in Sweden Closing accumulated amortization –148 –126 (22%) –32 –475 Effects of non-deductible costs –30 –16 Closing carrying amount 104 101 Effects of non-taxable income 49 417 Foreign tax –8 – NOTE 4 Tangible assets Adjustment of tax from earlier years 99 – Recognized tax expense 78 –74
Equipment, tools, fixtures and fittings, SEK M 2016 2015 Opening cost 7 7 Investments 1 – Closing accumulated cost 8 7 Opening depreciation –4 –4 Depreciation for the year –1 0 Closing accumulated depreciation –5 –4 Closing carrying amount 3 3
82 GETINGE ANNUAL REPORT 2016 PARENT COMPANY FINANCIAL STATEMENTS
NOTE 9 Participations in Group companies
Carrying Carrying Swedish Corp. No. of Percentage amount, amount, Parent Company’s holdings Reg. office Reg. No. shares holding SEK M 2016 SEK M 2015 Arjo Finance Holding AB Gothenburg 556473–1700 23,062,334 100 5,716 5,716 Getinge Sterilization AB Halmstad 556031–2687 50,000 100 452 452 Maquet Holding AB Halmstad 556535–6317 1,000 100 1,481 1,481 Getinge Disinfection AB Halmstad 556042–3393 25,000 100 118 118 Getinge Letting AB Halmstad 556495–6976 1,000 100 0 0 Getinge Skärhamn AB Tjörn 556412–3569 1,000 100 6 6 Arjo AB Gothenburg 559092–8064 500,000 100 0 – Getinge Australia Pty Ltd Australia 39,500 100 9 9 Getinge NV Belgium 600 100 2 2 Getinge Danmark A/S Denmark 525 100 3 3 Getinge IT Solutions Aps Denmark 533,000 100 27 27 Getinge Finland Oy Finland 15 100 0 0 Getinge Infection Control SAS France 289,932 85 236 236 Getinge/Castle International Ltd Greece 100 100 2 2 Getinge Treasury Ireland DAC Ireland 1 100 891 984 Getinge Japan KK Japan 10,000 100 – 16 Getinge (Suzhou) Co. Ltd. China 1 100 111 111 Getinge Holding Luxembourg Sarl Luxembourg 163,972 100 10,887 10,887 Getinge Norge AS Norway 4,500 100 4 4 Getinge Poland Sp.z.o.o Poland 50,500 100 13 13 NeuroMédica SA Spain 40,000 100 16 16 ArjoHuntleigh GmbH Austria 1 3 7 7 Getinge Shared Services Sp.z.o.o Poland 60,600 100 33 33 Getinge Holding USA Inc USA 10,000 100 4,977 4,977 Getinge Shared Services CR Sociedad Costa Rica 10 100 26 5 Maquet Medizintechnik vertrieb und Service GmbH Austria 1 100 7 7 Total carrying amount 25,024 25,112
The Parent Company’s holding of shares in the subsidiaries constitutes the entire capital of the respective company, which also corresponds to 100% of the voting rights, unless otherwise stated.
Subsidiaries of sub-groups • Arjo Scandinavia AB, 556528- Australia Denmark Getinge Group, with operations in 4600, Eslöv • Getinge Australia Pty Ltd • ArjoHuntleigh A/S many countries, is organized into • ArjoHuntleigh International AB, • Huntleigh Healthcare Pty Ltd • Cetrea A/S sub-groups in several categories, 556528-1440, Eslöv • Maquet Australia Pty Ltd • Getinge Danmark A/S and accordingly, the legal structure • CombiMobil AB, 556475-7242, • Pulsion Pacific Pty Ltd • Getinge IT Solutions ApS cannot be reflected in a simpler Eslöv • Getinge Water Systems A/S manner in a tabular presentation. • Getinge Disinfection AB, Belgium • Maquet Denmark A/S The following is a list of the compa- 556042-3393, Halmstad • ArjoHuntleigh NV • Polystan A/S nies that is not owned directly by • Getinge Infection Control AB, • Getinge NV Getinge AB. Except for the follow- 556547-8798, Halmstad • Maquet Belgium NV Dominican Republic ing, the ownership interest is 100%. • Getinge International AB, • Medibol Holding NV • Getinge Dominican Republic SA 556547-8780, Halmstad • Medibol NV • Maquet Thailand Co. Ltd • Getinge Letting AB, 556495- • Pulsion Benelux NV/SA Finland Thailand, 49% 6976, Halmstad • Getinge Finland Oy • ArjoHuntleigh (Thailand) Co. Ltd • Getinge Sterilization AB, 556031- Brazil • Maquet Finland Oy Thailand, 49% 2687, Halmstad • Maquet do Brasil Equipamentos • PULSION Medical Systems SE • Getinge Sverige AB, 556509- Medicos Ltda France Germany, 78% 9511, Gothenburg • Maquet Cardiopulmonary do • ArjoHuntleigh SAS • Getinge Skärhamn AB, 556412- Brasil Ind. e Com S.A. • Filance SA Sweden 3569, Tjörn • Getinge France SAS • Arjo AB, 559092-8064, Gothen- • Getinge Treasury AB, 556535- Colombia • Getinge Infection Control SAS burg 6309, Gothenburg • Maquet Colombia S.A.S • Getinge La Calhéne France SA • ArjoHuntleigh AB, 556304-2026, • Maquet Critical Care AB, • Getinge Lancer SA Malmö 556604-8731, Solna Costa Rica • Intervascular SAS • Arjo Finance Holding AB, • Maquet Holding AB, 556535- • Getinge Group Shared Services • Maquet SAS 556473-1700, Gothenburg 6317, Halmstad CR Sociedad • Arjo Hospital Equipment AB, • Maquet Nordic AB, 556648-1163, 556247-0145, Eslöv Solna • Arjo Ltd Med. AB, 556473-1718, Gothenburg
GETINGE ANNUAL REPORT 2016 83 PARENT COMPANY FINANCIAL STATEMENTS
Note 9, continued from preceding page
United Arab Emirates Mexico Spain • Maquet Cardiopulmonary Ltd Sti • ArjoHuntleigh Middle East • Maquet Mexicana, S. de R.L. • Getinge Group Spain SL • Maquet Tibbi Sistemler San Ve FZ-LLC de CV • Neuromedica SA Tk AS • Maquet Middle East FZ-LLC • Pulsion Medical System S. de R.L. de C.V UK Germany Greece • 1st Call Mobility Ltd • ArjoHuntleigh GmbH • Getinge/Castle International Ltd Netherlands • ArjoHuntleigh International Ltd* • Getinge Holding GmbH • ArjoHuntleigh Nederland B.V. • Altrax Group Ltd • Getinge-Maquet Germany Hold- Hong Kong • Atrium Europe BV • Datascope Medical Co. Ltd ing GmbH • ArjoHuntleigh (Hong Kong) Ltd • Datascope BV • Getinge Extended Care UK Lim- • Getinge Vertrieb und Service • Getinge Hong Kong • Getinge Arjo Holding Nether- ited* GmbH Company Ltd lands B.V. • Getinge Holding Ltd* • HCS Homecare Service GmbH • Maquet Hong Kong Ltd • Getinge B.V. • Getinge Production Ltd • HNE Huntleigh Nesbit Evans • Huntleigh Holdings BV • Getinge UK Ltd Healthcare GmbH India • Maquet Netherlands B.V. • Jostra Ltd • Maquet Cardiopulmonary GmbH • ArjoHuntleigh Healthcare • Maquet Verwaltungs B.V. • Huntleigh Diagnostics Limited • Maquet Financial Services India Pvt Ltd • Huntleigh Healthcare Ltd GmbH • Atrium Medical India Pvt Ltd Norway • Huntleigh International Holdings • Maquet GmbH • Getinge India Pvt Ltd • ArjoHuntleigh Norway A/S Ltd* • Maquet Holding BV&Co KG • Maquet Medical India Pvt Ltd • Getinge Norge A/S • Huntleigh Luton Ltd* • Maquet Hospital Solutions • Huntleigh Properties Ltd* GmbH Ireland New Zealand • Huntleigh (SST) Ltd • Maquet Vertrieb und Service • ArjoHuntleigh Ireland Ltd • ArjoHuntleigh Ltd • Huntleigh Technology Ltd* Deutschland GmbH • Getinge Treasury Ireland DAC • Maquet New Zealand Pty Ltd • Maquet Ltd • MediKomp GmbH • Maquet Ireland Ltd • Pegasus Ltd • Maquet Medical Systems AG Poland • Pulsion Medical UK Ltd Italy • ArjoHuntleigh Polska Sp. z.o.o. • Scantrack Healthcare Ltd Ukraine • ArjoHuntleigh Spa • Maquet Poland Sp.z.o.o. • Maquet Ukraine LLC • Getinge S.p.A. • Getinge IC Production Poland South Africa • Getinge Surgical Systems Hold- Sp.z.o.o. • ArjoHuntleigh South Africa (Pty) USA ing Srl • Getinge Poland Sp.z.o.o. Ltd • ArjoHuntleigh Inc • Maquet Italia Spa • Getinge Shared Services • Huntleigh Africa Provincial Sales • Atrium Medical Corp Sp.z.o.o. (Pty) Ltd • Datascope Trademark Corp Japan • Huntleigh Africa (Pty) Ltd • Genisphere Inc • Arjo Japan KK Portugal • Maquet South Africa • Getinge USA Inc • Maquet Japan KK • Maquet Portugal Lda • Getinge Group Logistics South Korea Americas, LLC Canada Russia • ArjoHuntleigh Korea Co. Ltd • Getinge Holding USA, Inc • ArjoHuntleigh Canada Inc • Maquet LLC • Getinge Korea Co Ltd • Getinge Holding USA II, Inc • ArjoHuntleigh Magog Inc • Maquet Medical Korea Co. Ltd • Getinge Sourcing LLC • Getinge Canada Ltd Switzerland • InterVascular Inc • Maquet-Dynamed Inc • ArjoHuntleigh AG Taiwan • InterVascular C Inc • Getinge AG • Getinge Group Taiwan Co., Ltd • InterVascular V Inc China • Getinge Schweiz AG • La Calhéne Inc. • Acare Medical Science Co. Ltd • Maquet AG Thailand • Lancer Inc • ArjoHuntleigh (Shanghai) Medi- • Maquet Thailand Co. Ltd • Laax Inc cal Equipment Co Ltd Serbia • ArjoHuntleigh (Thailand) Co. Ltd • Maquet Cardiovascular LLC • Getinge (Shanghai) Trading • Getinge Group South East • Maquet Cardiovascular US Sales Co.Ltd Europe Czech Republic LLC • Getinge (Suzhou) Co. Ltd • ArjoHuntleigh sro • Maquet Datascope Inc • Maquet (Shanghai) Medical Singapore • Getinge Czech Republic, s.r.o. • SteriTec Products Mfg Inc Equipment Co., Ltd. • ArjoHuntleigh Singapore Pte Ltd • Maquet Czeck Republic s.r.o. • Maquet (SuZhou) Co Ltd • Boxuan Medical Equipment Austria • Maquet (SuZhou) Medical Engi- Pte Ltd Turkey • ArjoHuntleigh GmbH neering Co., Ltd. • Getinge Singapore Pte. Ltd. • Getinge Saglik Urunleri Ithalat • Maquet Medizintechnik Vertrieb • Maquet South East Asia Ltd Sin- Ihracat Ticaret Ve Sanayi Lim- und Service GmbH Luxembourg gapore ited Sirketi • Getinge Holding Luxembourg • Getinge Stericool Medikal S.a.r.l. Slovakia Aletler Sanayi ve • Maquet Slovakia s.r.o. • Trans Medikal Aletler San.ve Tic A.S
* The Parent Company has issued a guarantee under section 479(C) of the UK Companies Act 2006 for the year ended 31 December 2016 in respect of the subsidiaries registered in the United Kingdom, marked above. The Parent Company guarantees all outstanding liabilities to which the subsidiary companies are subject to at 31 December 2016, until they are satisfied in full and the guarantee is enforceable against the company by any person to whom the subsidiary companies are liable in respect of those liabilities. The subsidiaries have taken advantage of the exemption from audit by virtue of Section 479(A) of the Companies Act 2006.
NOTE 10 Interest-bearing long-term loans NOTE 11 Interest-bearing current loans
SEK M 2016 2015 SEK M 2016 2015 Liabilities to credit institutions 15,851 15,929 Liabilities to credit institutions 5,646 5,147 Total 15,851 15,929 Total 5,646 5,147
All loans fall due for payment within five years.
84 GETINGE ANNUAL REPORT 2016 PARENT COMPANY FINANCIAL STATEMENTS
NOTE 12 Prepaid expenses and NOTE 16 Employee costs accrued income Board 2016, SEK M and CEO Other Total SEK M 2016 2015 Salaries and remuneration –58 –79 –137 Prepaid financial expenses 31 9 Social security expenses –24 –28 –52 Other 33 39 Pension expenses –14 –28 –42 Total 64 48 Total –96 –135 –231
Board 2015, SEK M and CEO Other Total NOTE 13 Accrued expenses and Salaries and remuneration –43 –50 –93 Social security expenses –12 –9 –21 deferred income Pension expenses –36 –5 –41 Total –91 –64 –155 SEK M 2016 2015 Salaries 46 27 Social security expenses 84 66 Interest expenses 40 53 NOTE 17 Auditing Other 30 22 Total 200 168 Fee to PwC, SEK M 2016 2015 Fee and expense reimbursement: Auditing assignment –6 –5 Auditing activities other than auditing assign- NOTE 14 Pledged assets and ments –1 –1 contingent liabilities Tax consultancy services – – Other services –1 –4 Total –8 –10 Pledged assets The Parent Company has no pledged assets in 2016 or 2015. Öhrlings PricewaterhouseCoopers AB (PwC) has the auditing assigment for the Parent Company. Auditing assignment refer to statutory auditing, meaning assignments required to issue the auditor’s report. Auditing activ- Contingent liabilities, SEK M 2016 2015 ities other than auditing assignments include the review of interim reports and services in conjunction with the issuance of certificates and audit cer- Pension guarantees FPG/PRI 251 243 tificates. Tax consultancy services primarily pertain to general tax matters Other 346 37 concerning corporate tax. Other services pertain to consultancy regarding Total 597 280 financial accounting and services in conjunction with acquisitions.
NOTE 18 Proposed allocation of profits NOTE 15 Average number of employees The following profits in the Parent Company Sweden 2016 2015 are at the disposal of the Annual General Meeting, SEK M: Men 37 36 Share premium reserve 3,435 Women 27 19 Retained earnings 3,259 Total 64 55 Net profit for the year 222 Total 6,916 Distribution of senior executives and Board members at year-end The Board and Chief Executive Officer propose that a Women dividend of SEK 2.00 per share shall be distributed to shareholders 477 Board members 3 3 to be carried forward 6,439 Other members of senior management, including the CEO 2 – Total 6,916 Men Board members 7 7 Other members of senior management, including the CEO 2 3
GETINGE ANNUAL REPORT 2016 85 AUDITOR’S REPORT
Auditor’s report
To the meeting of shareholders in Getinge AB (publ), Corporate Identity Number 556408-5032
Report on the annual accounts and consolidated accounts Our audit activities Opinions The focus and scope of the audit We have audited the annual accounts and consolidated accounts of We designed our audit by determining materiality and assessing the risks of Getinge AB for 2016 with the exception of the Corporate Governance material misstatement in the consolidated financial statements. In particu- Report on pages 45–49. The annual accounts and consolidated accounts of lar, we considered where management made subjective judgements; for the Company are included on pages 42–85 in this document. example, in respect of significant accounting estimates that involved mak- In our opinion, the annual accounts have been prepared in accordance ing assumptions and considering future events that are inherently uncer- with the Annual Accounts Act and present fairly, in all material respects, the tain. As in all of our audits, we also addressed the risk of management over- financial position of parent company as of 31 December 2016 and its finan- ride of internal controls, including among other matters consideration of cial performance and cash flow for the year then ended in accordance with whether there was evidence of bias that represented a risk of material mis- the Annual Accounts Act. The consolidated accounts have been prepared statement due to fraud. in accordance with the Annual Accounts Act and present fairly, in all mate- We tailored the scope of our audit in order to perform sufficient work to rial respects, the financial position of the group as of 31 December 2016 and enable us to provide an opinion on the consolidated financial statements as their financial performance and cash flow for the year then ended in accor- a whole, taking into account the structure of the Group, the accounting pro- dance with International Financial Reporting Standards (IFRS), as adopted cesses and controls, and the industry in which the group operates. by the EU, and the Annual Accounts Act. Our opinion does not include the Corporate Governance Report found on pages 45–49. The statutory admin- Materiality istration report is consistent with the other parts of the annual accounts The scope of our audit was influenced by our application of materiality. An and consolidated accounts. audit is designed to obtain reasonable assurance whether the financial We therefore, recommend that the general meeting of shareholders statements are free from material misstatement. Misstatements may arise adopts the income statement and balance sheet for the parent company due to fraud or error. They are considered material if individually or in aggre- and the group. gate, they could reasonably be expected to influence the economic deci- sions of users taken on the basis of the financial statements. Basis for Opinions Based on our professional judgement, we determined certain quantita- We conducted our audit in accordance with International Standards on tive thresholds for materiality, including the overall materiality for the finan- Auditing (ISA) and generally accepted auditing standards in Sweden. Our cial statements as a whole. These, together with qualitative considerations, responsibilities under those standards are further described in the Audi- helped us to determine the scope of our audit and the nature, timing and tor’s Responsibilities section. We are independent of the parent company extent of our audit procedures and to evaluate the effect of misstatements, and the group in accordance with professional ethics for accountants in both individually and in aggregate on the financial statements as a whole. Sweden and have otherwise fulfilled our ethical responsibilities in accor- dance with these requirements. Key audit matters We believe that the audit evidence we have obtained is sufficient and Key audit matters of the audit are those matters that, in our professional appropriate to provide a basis for our opinions. judgment, were most significant in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters.
Key audit matters How our audit addressed the Key audit matter
Impairment testing of intangible assets In our audit, we have evaluated the calculation model applied by manage- As at 31 December 2016, goodwill and other intangible assets with an ment and we have reconciled important assumptions against the Compa- indefinite useful life amounted to MSEK 23,037 (21,838). According to IFRS, ny’s budget and strategic plan. an annual impairment test is to be performed. We have also taken a positon regarding the management’s assump- The Company’s management bases its impairment assessment on a tions and judgments. This has taken place through an analysis of the calculation of the discounted cash flow for the cash generating units in degree to which previous years’ assumptions have been achieved and of which goodwill is reported. any possible adjustments of the assumptions from previous years, arising This impairment test is based on judgments and assumptions regard- as a result of the development of the operations, or external factors. ing future cash flows and on circumstances which are complex and We have challenged management’s assumptions, primarily linked to involve a high level of judgment by company management. Information is the variables having the largest impact on the impairment assessment, provided in Notes 1 and 12 as to how the Company’s management has such as growth, profit margins and the discount factor (cost of capital). undertaken its assessments, and also provides information on important This has taken place through our own sensitivity analyses in order to test assumptions and sensitivity analyses. It is also seen that no impairment the margin of safety for the respective segments. requirement has been identified based on the assumptions undertaken. We have tested the impact of changes in significant assumptions which such factors as operating income and the discount factor have on the margin of safety and, based on these tests, we have evaluated the risk of the existence of an impairment requirement. We have also assessed the correctness of the disclosures included in the financial statements.
86 GETINGE ANNUAL REPORT 2016 AUDITOR’S REPORT
Key audit matters How our audit addressed the Key audit matter
Valuation of accounts receivables In our audit we have evaluated the correctness of the valuation of the Accounts receivables comprise a significant area in the Group’s financial accounts receivables by assessing the appropriateness of the impair- reports as they are equivalent to approximately 15% of total assets. Based ment testing executed by management, which was based on individual on the Group’s business operations, a significant portion of net sales is assessments taking into consideration the unique risk profiles of the local generated during the fourth quarter, which usually implies a significant markets. increase in accounts receivables in conjunction with the year-end clos- Our audit includes an assessment of the control environment for the ing. The Group undertakes business operations with both private and sales process and also includes an examination of the reported revenue public players in a number of different countries where, for certain transactions against underlying documentation, such as customer agree- regions, the payment of client invoices takes a long time after delivery to ments, sales orders, suppliers’ documentation, client invoices, reconcilia- the clients. In the Group’s operation, this refers primarily to the United tion against price lists, payment verification and obtaining client invoice States of America, United Arab Emirates, Italy and Spain. As at 31 Decem- confirmations from clients. We have examined management’s assess- ber 2016, accounts receivables matured more than 90 days amounted to ment of the valuation of client receivables compared with the historical MSEK 1,460 which is equivalent to approximately 18% of total accounts outcome for bad debts. The appropriate audit procedures for the respec- receivables as per the balance sheet date. The valuation of these, and tive significant units in the Group have been determined based on the other matured, or yet to mature, accounts receivables, is based on the nature of the operations and the complexity of the sales transactions. We management’s assessment of the clients’ future payment capacity. have also assessed the correctness of the information regarding accounts receivables provided in the financial statements.
Reporting of provisions We have examined the external documentation from FDA and also Get- Provisions comprise a significant area in the Group’s financial reports. inge’s internal documentation regarding the assessment of future costs Sub items reported in these areas refer primarily to assumptions regard- for the action plan to fulfill FDA’s quality requirements. We have assessed ing pensions, restructuring programs, severance pay to previous group the reasonableness of the reported provision based on the information management and action plans as regards FDA. Common to these areas is presented to us and based on the historical outcome of the previous that they are primarily based on significant assessments undertaken by action plans. We have assessed the completeness and correctness of the management regarding future events. The assessment of these areas is information included in the annual report regarding the action plans asso- associated with a large degree of uncertainty and subjectivity. In our ciated with FDA involving the management’s judgments concerning these audit, all of these areas have been subject to examination but we have risks. particularly focused our audit activities on the assessment of the provi- As regards other provisions, we have assessed the reasonableness of sions for the action plans regarding FDA, which amount to MSEK 371. the management’s assumptions and cost calculations. This assessment has taken place based on available information and historical outcome.
Other information than the annual accounts and consolidated In preparing the annual accounts and consolidated accounts, The Board accounts of Directors and the Managing Director are responsible for the assessment This document also contains other information than the annual accounts of the Company’s and the group’s ability to continue as a going concern. and consolidated accounts and is found on pages 1–41. The Board of Direc- They disclose, as applicable, matters related to going concern and using the tors and the Managing Director are responsible for this other information. going concern basis of accounting. The going concern basis of accounting Our opinion on the annual accounts and consolidated accounts does not is however not applied if the Board of Directors and the Managing Director cover this other information and we do not express any form of assurance intends to liquidate the company, to cease operations, or has no realistic conclusion regarding this other information. alternative but to do so. In connection with our audit of the annual accounts and consolidated The Audit Committee of the Board of Directors shall, without prejudice to accounts, our responsibility is to read the information identified above and the Board of Director’s responsibilities and tasks in general, among other consider whether the information is materially inconsistent with the annual things oversee the company’s financial reporting process. accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether Auditor’s responsibility the information otherwise appears to be materially misstated. Our objectives are to obtain reasonable assurance about whether the If we, based on the work performed concerning this information, con- annual accounts and consolidated accounts as a whole are free from mate- clude that there is a material misstatement of this other information, we are rial misstatement, whether due to fraud or error, and to issue an auditor’s required to report that fact. We have nothing to report in this regard. report that includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance Responsibilities of the Board of Directors and the Managing Director with ISAs and generally accepted auditing standards in Sweden will always The Board of Directors and the Managing Director are responsible for the detect a material misstatement when it exists. Misstatements can arise preparation of the annual accounts and consolidated accounts and that from fraud or error and are considered material if, individually or in the they give a fair presentation in accordance with the Annual Accounts Act aggregate, they could reasonably be expected to influence the economic and, concerning the consolidated accounts, in accordance with IFRS as decisions of users taken on the basis of these annual accounts and consoli- adopted by the EU. The Board of Directors and the Managing Director are dated accounts. also responsible for such internal control as they determine is necessary to A further description of our responsibility for the audit of the annual enable the preparation of annual accounts and consolidated accounts that accounts is found on Revisorsnämnden’s (The Supervisory Board of Public are free from material misstatement, whether due to fraud or error. Accountant’s) web site: www.revisorsinspektion.se/rn/showdocument/ documents/re_dok/revisors_ansvar.pdf. This description is a part of the Auditor’s Report.
GETINGE ANNUAL REPORT 2016 87 AUDITOR’S REPORT
Report on other legal and regulatory requirements Our objective concerning the audit of the proposed appropriations of the Opinions company’s profit or loss, and thereby our opinion about this, is to assess In addition to our audit of the annual accounts and consolidated accounts, with reasonable degree of assurance whether the proposal is in accordance we have also audited the administration of the Board of Directors and the with the Companies Act. Managing Director of Getinge AB for the year 2016 and the proposed appro- Reasonable assurance is a high level of assurance, but is not a guarantee priations of the company’s profit or loss. that an audit conducted in accordance with generally accepted auditing We recommend to the general meeting of shareholders that the profit be standards in Sweden will always detect actions or omissions that can give appropriated in accordance with the proposal in the statutory administra- rise to liability to the company, or that the proposed appropriations of the tion report and that the members of the Board of Directors and the Manag- company’s profit or loss are not in accordance with the Companies Act. ing Director be discharged from liability for the financial year. A further description of our responsibility for the audit of the annual accounts is found on Revisorsnämnden’s (The Supervisory Board of Public Basis for Opinions Accountant’s) web site: www.revisorsinspektion.se/rn/showdocument/ We conducted the audit in accordance with generally accepted auditing documents/re_dok/revisors_ansvar.pdf. This description is a part of the standards in Sweden. Our responsibilities under those standards are fur- Auditor’s Report. ther described in the Auditor’s Responsibilities section. We are indepen- dent of the parent company and the group in accordance with professional The auditor’s examination of the corporate governance statement ethics for accountants in Sweden and have otherwise fulfilled our ethical The Board of Directors is responsible for that the corporate governance responsibilities in accordance with these requirements. statement on pages 45–49 has been prepared in accordance with the We believe that the audit evidence we have obtained is sufficient and Annual Accounts Act. appropriate to provide a basis for our opinions. Our examination of the corporate governance statement is conducted in accordance with FAR´s auditing standard RevU 16 The auditor´s examina- Responsibilities of the Board of Directors and the Managing Director tion of the corporate governance statement. This means that our examina- The Board of Directors is responsible for the proposal for appropriations of tion of the corporate governance statement is different and substantially the company’s profit or loss. At the proposal of a dividend, this includes an less in scope than an audit conducted in accordance with International assessment of whether the dividend is justifiable considering the require- Standards on Auditing and generally accepted auditing standards in Swe- ments which the company’s and the group’s type of operations, size and den. We believe that the examination has provided us with sufficient basis risks place on the size of the parent company’s and the group’s equity, con- for our opinions. solidation requirements, liquidity and position in general. A corporate governance statement has been prepared. Disclosures in The Board of Directors is responsible for the company’s organization and accordance with chapter 6 section 6 the second paragraph points 2–6 of the administration of the company’s affairs. This includes among other the Annual Accounts Act and Chapter 7 section 31 the second paragraph things continuous assessment of the company’s and the group’s financial the same law are consistent with the other parts of the annual accounts and situation and ensuring that the company’s organization is designed so that consolidated accounts and are in accordance with the Annual Accounts the accounting, management of assets and the company’s financial affairs Act. otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administration according to the Board of Direc- tors’ guidelines and instructions and among other matters take measures Gothenburg, 1 March 2017 that are necessary to fulfil the company’s accounting in accordance with Öhrlings PricewaterhouseCoopers AB law and handle the management of assets in a reassuring manner.
Auditor’s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess Johan Rippe Eric Salander with a reasonable degree of assurance whether any member of the Board of Authorised Public Accountant Authorised Public Accountant Directors or the Managing Director in any material respect: Auditor-in-Charge • has undertaken any action or been guilty of any omission which can give rise to liability to the company, or • in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
88 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTSDATA
Getinge information
Multi-year overview: Group
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ORDER SITUATION. SEK M Order intake 16,497 19,447 23,036 22,406 22,012 24,416 25,395 26,817 30,431 30,142
INCOME STATEMENT. AMOUNTS IN SEK M UNLESS OTHERWISE STATED. Net sales 16,445 19,272 22,816 22,172 21,854 24,248 25,287 26,669 30,235 29,756 of which, overseas sales, % 97.8 98.0 98.2 98.4 98.0 98.2 98.2 98.1 98.0 98.2 EBITDA 2,938 3,846 4,446 5,111 5,376 5,748 5,614 4,765 5,187 4,990 EBITA – before restructuring, integration and acquisition expenses 2,651 3,428 3,933 4,371 4,571 4,849 4,766 4,501 4,179 4,341 Operating profit 2,255 2,877 3,070 3,689 3,924 4,006 3,748 2,646 2,729 2,287 Net financial items –507 –751 –436 –573 –480 –570 –595 –659 –732 –637 Profit before tax 1,748 2,126 2,634 3,116 3,444 3,436 3,153 1,987 1,997 1,650 Taxes –515 –603 –720 –836 –907 –905 –858 –539 –540 –437 Net profit for the year 1,233 1,523 1,914 2,280 2,537 2,531 2,295 1,448 1,457 1,213
BALANCE SHEET. SEK M Intangible assets 10,524 15,879 20,353 19,224 24,498 24,895 25,126 30,064 30,543 32,004 Tangible assets 2,327 3,257 3,674 3,192 3,452 4,066 4,341 4,971 4,699 4,313 Financial assets 755 1,250 1,135 761 750 887 667 1,410 1,374 1,329 Inventory 2,913 4,015 4,156 3,619 3,837 4,060 4,254 5,245 5,409 5,431 Other receivables 5,557 7,125 6,791 6,696 7,725 7,759 8,767 9,646 9,742 10,454 Cash and cash equivalents 894 1,506 1,389 1,093 1,207 1,254 1,148 1,482 1,468 1,680 Total assets 22,970 33,032 37,498 34,585 41,469 42,921 44,303 52,818 53,235 55,211 Shareholders’ equity 6,805 10,890 12,726 13,248 14,636 15,200 16,560 18,694 19,593 20,916 Provisions for pensions, interest-bearing 1,510 1,435 1,409 1,813 1,627 2,111 2,298 3,271 3,052 3,368 Restructuring reserve 71 68 202 219 172 201 238 649 389 531 Provisions 980 1,285 2,116 1,499 2,087 1,823 1,916 1,929 1,854 1,325 Loans, interest-bearing 9,455 13,244 16,052 12,656 16,689 17,525 17,169 20,752 21,283 21,701 Other liabilities, non-interest bearing 4,149 6,110 4,993 5,150 6,258 6,061 6,122 7,523 7,064 7,370 Total shareholders’ equity and liabilities 22,970 33,032 37,498 34,585 41,469 42,921 44,303 52,818 53,235 55,211 Net debt, including pension liabilities 10,071 13,173 16,072 13,376 17,109 18,382 18,318 22,541 22,867 23,389 Net debt, excluding pension liabilities 8,561 11,738 14,663 11,563 15,482 16,271 16,020 19,270 19,815 20,021
CASH FLOW. AMOUNTS IN SEK M UNLESS OTHERWISE STATED. Cash flow from operating activities 1,496 1,774 4,000 4,124 3,496 3,687 3,544 3,473 3,458 3,671 – per average number of shares 7.4 8.4 16.8 17.3 14.7 15.5 14.9 14.6 14.5 15.4 Acquired operations 6,106 5,008 5,072 10 4,649 2,226 248 1,236 41 212 Net investments in non-current assets* 468 642 907 588 688 959 1,004 945 1,046 831 Cash conversion, % 51 46 90 81 65 64 63 73 67 74
RETURN INDICATORS Return on working capital, % 19.4 14.0 13.3 14.2 15.3 13.1 12.8 8.2 8.6 8.3 Return on shareholders’ equity, % 20.0 17.2 16.2 17.6 18.2 17.0 14.4 10.4 8.5 6.0 EBITA margin before restructuring, acquisition expenses and integr. cost, % 16.1 17.8 17.2 19.7 20.9 20.0 18.8 16.9 13.8 14.6 Operating margin, % 13.7 14.9 13.5 16.6 18.0 16.5 14.8 9.9 9.0 7.7 EBITDA margin, % 17.9 20.0 19.5 23.1 24.6 23.7 22.2 17.9 17.1 16.8
FINANCIAL INDICATORS Interest-coverage ratio, multiple 4.0 4.0 5.5 6.7 8.4 7.3 6.9 5.7 4.6 5.6 Equity/assets ratio, % 29.6 33.0 33.9 38.3 35.3 35.4 37.4 35.4 36.8 37.9 Net debt/equity ratio, multiple 1.48 1.21 1.26 1.01 1.17 1.21 1.10 1.21 1.17 1.12 Working capital, SEK M 10,555 22,051 23,771 27,247 26,453 31,920 32,526 36,529 40,771 43,383 Shareholders’ equity, December 31, SEK M 6,805 10,890 12,726 13,248 14,636 15,200 16,560 18,694 19,593 20,916
PERSONNEL No. of employees, December 31 10,358 11,604 12,135 12,208 13,111 14,919 15,183 15,747 15,424 15,582 Salaries and other remuneration, SEK M 5,190 5,838 7,113 6,938 7,155 7,479 7,888 8,394 10,001 10,099
SHARE DATA. AMOUNTS IN SEK PER SHARE UNLESS OTHERWISE STATED. Earnings per share after tax 6.10 7.23 8.02 9.55 10.61 10.58 9.59 6.01 5.83 4.98 Market price, December 31 173.50 93.50 136.30 140.90 174.40 220.00 220.00 177.80 222.50 146.1 Cash flow 5.09 5.37 12.98 14.84 11.78 11.45 10.66 10.61 10.12 11.92 Dividend 2.40 2.40 2.75 3.25 3.75 4.15 4.15 2.80 2.80 2.00 Dividend growth, % 9.09 0.00 14.58 18.18 15.40 10.67 0.00 –32.53 0.00 –28.6 Dividend yield, % 1.38 2.57 2.02 2.31 2.15 1.89 1.89 1.57 1.26 1.37 Price/earnings ratio 28.44 12.93 17.00 14.75 16.44 20.79 22.94 29.58 38.16 29.34 Dividend as profit percentage, % 39.34 33.20 34.29 34.03 35.34 39.22 43.27 46.59 48.03 40.15 Shareholders’ equity 32.54 50.66 53.30 55.49 61.30 63.66 69.58 78.45 82.21 87.76 Average number of shares (million) 201.9 210.8 238.3 238.3 238.3 238.3 238.3 238.3 238.3 238.3 Number of shares, December 31 (million) 201.9 214.5 238.3 238.3 238.3 238.3 238.3 238.3 238.3 238.3
*Excluding capital development costs and rental equipment
GETINGE ANNUAL REPORT 2016 89 DATA
Multi-year overview 2015–2016: current business areas
SURGICAL WORKFLOWS 2015 2016 Order intake, SEK M 11,013 10,643 Net sales, SEK M 10,891 10,496 Share of Group’s net sales, % 36.0 35.3 Gross profit, SEK M 4,228 3,961 Gross margin, % 38.8 37.7 Operating expenses, SEK M –3,023 –2,705 EBITA – before restructuring, acquisition and integration costs, SEK M 1,233 1,283 Share of Group’s EBITA, % 29.5 29.6 EBITA margin, % 11.3 12.2 Operating profit, SEK M 1,054 1,001 Share of Group’s operating profit, % 38.6 43.8 Operating margin, % 9.7 9.5
ACUTE CARE THERAPIES 2015 2016 Order intake, SEK M 11,637 12,059 Net sales, SEK M 11,577 11,804 Share of Group’s net sales, % 38.3 39.7 Gross profit, SEK M 6,428 6,552 Gross margin, % 55.5 55.5 Operating expenses, SEK M –4,751 –4,793 EBITA – before restructuring, acquisition and integration costs, SEK M 2,276 2,326 Share of Group’s EBITA, % 54.5 53.6 EBITA margin, % 19.7 19.7 Operating profit, SEK M 1,346 1,000 Share of Group’s operating profit, % 49.3 43.7 Operating margin, % 11.6 8.5
PATIENT & POST-ACUTE CARE 2015 2016 Order intake, SEK M 7,781 7,440 Net sales, SEK M 7,767 7,456 Share of Group’s net sales, % 25.7 25.1 Gross profit, SEK M 3,507 3,327 Gross margin, % 45.2 44.6 Operating expenses, SEK M –2,750 –2,497 EBITA – before restructuring, acquisition and integration costs, SEK M 889 956 Share of Group’s EBITA, % 21.3 22.0 EBITA margin, % 11.4 12.8 Operating profit, SEK M 573 665 Share of Group’s operating profit, % 21.0 29.1 Operating margin, % 7.4 8.9
Getinge Group has performed extremely well over the past ten years. Sales vascular surgery), Datascope (heart-support products), Atrium Medical grew from SEK 16 billion to SEK 30 billion during the period. The strong (products for the cardiovascular market) and the TSS division of the US growth was achieved through a combination of acquisitions of leading busi- company KCI. Organic growth primarily derives from the development and nesses and organic growth. Major acquisitions include Huntleigh (wound launch of new products and geographic expansion. care, healthcare beds, etc.) two divisions of Boston Scientific (cardiac and
90 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTSDATA
Multi-year overview 2007–2015: previous business areas
MEDICAL SYSTEMS 2007 2008 2009 2010 2011 2012 2013 2014 2015 Order intake, SEK M 5,879 8,560 11,488 11,179 11,214 13,242 13,340 14,061 16,035 Net sales, SEK M 6,079 8,416 11,255 11,195 11,031 13,089 13,322 14,105 16 078 Share of Group’s net sales, % 37.0 43.7 49.3 50.5 50.5 54.0 52.7 52.9 53.0 Gross profit, SEK M 3,112 4,723 6,343 6,492 6,365 7,668 7,789 7,756 8,348 Gross margin, % 51.2 56.1 56.4 58.0 57.7 58.6 58.5 55.0 51.9 Operating expenses, SEK M –2,079 –3,140 –4,510 –4,372 –4,234 –5,236 –5,356 –5,390 –6,326 EBITA – before restructuring, acquisition and integration costs, SEK M 1,040 1,784 2,231 2,502 2,495 2,945 2,894 2,868 2,628 Share of Group’s EBITA, % 39.2 52.0 56.7 57.2 54.6 60.7 60.7 63.7 62.9 EBITA margin, % 17.1 21.2 19.8 22.3 22.6 22.5 21.7 20.3 16.3 Operating profit, SEK M 1,033 1,511 1,636 1,990 2,016 2,384 2,334 1,292 1,628 Share of Group’s operating profit, % 45.8 52.5 53.3 53.9 51.4 59.5 62.3 48.8 59.6 Operating margin, % 17.0 18.0 14.5 17.8 18.3 18.2 17.5 9.2 10.1 No. of employees at December 31 3,264 4,295 5,028 5,202 6,011 6,344 6,572 7,045 6,761
EXTENDED CARE 2007 2008 2009 2010 2011 2012 2013 2014 2015 Order intake, SEK M 6,124 6,223 6,406 6,033 5,711 5,965 6,910 7,217 7,781 Net sales, SEK M 6,009 6,174 6,467 6,033 5,751 5,990 6,870 7,164 7,767 Share of Group’s net sales, % 36.5 27.9 28.4 27.2 26.3 24.7 27.2 26.9 25.7 Gross profit, SEK M 2,750 2,847 2,964 2,977 2,981 3,052 3,369 3,398 3,505 Gross margin, % 45.8 46.1 45.8 49.3 51.8 51.0 49.0 47.4 45.1 Operating expenses, SEK M –1,895 –1,969 –2,074 –1,904 –1,800 –1,871 –2,202 –2,494 –2,806 EBITA – before restructuring, acquisition and integration costs, SEK M 971 992 1,002 1,178 1,278 1,274 1,296 1,041 831 Share of Group’s EBITA, % 28.6 25.6 23.8 27.0 28.0 26.3 27.2 23.1 19.9 EBITA margin, % 16.2 16.1 15.5 19.5 22.2 21.3 18.9 14.5 10.7 Operating profit, SEK M 597 732 835 1,048 1,121 1,005 983 817 509 Share of Group’s operating profit, % 21.8 24.4 24.4 28.4 28.6 25.1 26.2 30.9 18.7 Operating margin, % 9.9 11.9 12.9 17.4 19.5 16.8 14.3 11.4 6.5 No. of employees at December 31 4,228 4,314 4,111 3,958 5,092 5,457 5,479 5,499 4,460
INFECTION CONTROL 2007 2008 2009 2010 2011 2012 2013 2014 2015 Order intake, SEK M 4,494 4,665 5,142 5,192 5,086 5,209 5,144 5,539 6,615 Net sales, SEK M 4,357 4,682 5,094 4,944 5,072 5,170 5,095 5,400 6,390 Share of Group’s net sales, % 26.5 24.3 22.3 22.3 23.2 21.3 20.1 20.2 21.1 Gross profit, SEK M 1,659 1,763 1,945 1,902 2,056 1,984 1,966 1,956 2,309 Gross margin, % 38.1 37.7 38.2 38.5 40.5 38.4 38.6 36.2 36.1 Operating expenses, SEK M –1,034 –1,126 –1,261 –1,225 –1,268 –1,363 –1,405 –1,380 –1,611 EBITA – before restructuring, acquisition and integration costs, SEK M 640 652 700 691 798 631 575 592 720 Share of Group’s EBITA, % 24.1 19.0 17.8 15.8 17.5 13.0 12.1 13.2 17.2 EBITA margin, % 14.7 13.9 13.7 14.0 15.7 12.2 11.3 11.0 11.3 Operating profit, SEK M 625 634 599 652 788 618 431 536 592 Share of Group’s operating profit, % 27.7 22.0 19.5 17.7 20.1 15.4 11.5 20.3 21.7 Operating margin, % 14.3 13.5 11.8 13.2 15.5 12.0 8.5 9.9 9.3 No. of employees at December 31 2,866 2,995 2,996 3,048 2,008 3,118 3,132 3,203 4,203
GETINGE ANNUAL REPORT 2016 91 DATA
The group’s 20 largest markets
2016 2015 2014 2013 2012 SEK M % # SEK M % # SEK M % # SEK M % # SEK M % # USA 10,058 33.8% 1 10,098 33.4% 1 8,045 30.2% 1 7,567 29.9% 1 6,778 28.0% 1 Germany 2,091 7.0% 2 2,081 6.9% 3 1,963 7.4% 3 1,899 7.5% 2 1,758 7.2% 2 UK 2,052 6.9% 3 2,256 7.5% 2 1,998 7.5% 2 1,755 6.9% 3 1,746 7.2% 3 France 1,684 5.7% 4 1,685 5.6% 4 1,716 6.4% 4 1,578 6.2% 4 1,607 6.6% 4 Japan 1,399 4.7% 5 1,250 4.1% 5 1,166 4.4% 5 1,158 4.6% 5 1,344 5.5% 5 China 1,208 4.1% 6 1,243 4.1% 6 982 3.7% 7 964 3.8% 7 970 4.0% 6 Canada 1,002 3.4% 7 1,035 3.4% 8 985 3.7% 6 1,008 4.0% 6 946 3.9% 7 Australia 965 3.2% 8 1,117 3.7% 7 897 3.4% 8 786 3.1% 8 867 3.6% 8 Italy 813 2.7% 9 852 2.8% 9 777 2.9% 9 743 2.9% 9 753 3.1% 9 Netherlands 605 2.0% 10 605 2.0% 10 586 2.2% 10 562 2.2% 11 614 2.5% 11 Sweden 549 1.8% 11 595 2.0% 11 494 1.9% 12 464 1.8% 13 429 1.8% 13 India 504 1.7% 12 526 1.7% 12 407 1.5% 15 384 1.5% 15 335 1.4% 16 Belgium 428 1.4% 13 482 1.6% 13 465 1.7% 13 459 1.8% 14 422 1.7% 14 Switzerland 394 1.3% 14 418 1.4% 14 321 1.2% 19 339 1.3% 16 308 1.3% 17 Spain 359 1.2% 15 341 1.1% 18 337 1.3% 18 252 1.0% 20 259 1.1% 18 Austria 353 1.2% 16 386 1.3% 15 345 1.3% 16 306 1.2% 18 227 0.9% 20 Brazil 339 1.1% 17 355 1.2% 17 569 2.1% 11 641 2.5% 10 509 2.1% 12 Turkey 308 1.0% 18 282 0.9% 19 245 0.9% 20 174 0.7% 22 147 0.6% 26 Denmark 303 1.0% 19 263 0.9% 20 237 0.9% 21 260 1.0% 19 236 1.0% 19 Hong Kong 263 0.9% 20 235 0.7% 21 166 0.6% 24 134 0.5% 29 125 0.5% 27
The ten largest markets by business area
2016 2015 2014 2013 2012 SEK M % # SEK M % # SEK M % # SEK M % # SEK M % # SURGICAL WORKFLOWS BUSINESS AREA USA 2,283 21.8% 1 2,453 22.5% 1 1,859 19.3% 1 1,822 19.5% 1 1,672 18.2% 1 Germany 904 8.6% 2 895 8.2% 2 840 8.7% 2 848 9.1% 2 858 9.3% 2 Japan 716 6.8% 3 636 5.8% 5 610 6.3% 4 582 6.2% 4 679 7.4% 4 France 709 6.8% 4 751 6.9% 3 754 7.8% 3 721 7.7% 3 743 8.1% 3 UK 681 6.5% 5 690 6.3% 4 601 6.2% 5 465 5.0% 5 453 4.9% 5 China 584 5.6% 6 558 5.1% 6 437 4.5% 6 418 4.5% 6 439 4.8% 6 Sweden 344 3.3% 7 440 4.0% 8 342 3.6% 7 332 3.5% 7 312 3.4% 9 Australia 313 3.0% 8 454 4.2% 7 285 3.0% 9 226 2.4% 11 245 2.7% 10 Italy 284 2.7% 9 339 3.1% 9 296 3.1% 8 294 3.1% 8 330 3.6% 8 Switzerland 203 1.9% 10 218 2.0% 10 154 1.6% 16 180 1.9% 14 160 1.7% 16
ACUTE CARE THERAPIES BUSINESS AREA USA 5,444 46.1% 1 5,269 45.5% 1 4,071 41.3% 1 3,714 41.0% 1 3,621 40.0% 1 Germany 697 5.9% 2 689 5.9% 2 645 6.5% 2 565 6.2% 2 570 6.3% 3 Japan 654 5.5% 3 582 5.0% 3 538 5.5% 3 550 6.1% 3 634 7.0% 2 China 524 4.4% 4 552 4.8% 4 449 4.6% 4 437 4.8% 4 406 4.5% 4 France 391 3.3% 5 383 3.3% 5 413 4.2% 5 333 3.7% 6 342 3.8% 5 Italy 317 2.7% 6 304 2.6% 7 294 3.0% 6 266 2.9% 7 277 3.1% 8 India 291 2.5% 7 287 2.5% 8 241 2.4% 9 223 2.5% 9 194 2.1% 11 UK 262 2.2% 8 313 2.7% 6 261 2.6% 8 199 2.2% 12 188 2.1% 12 Canada 238 2.0% 9 253 2.2% 9 226 2.3% 11 260 2.9% 8 225 2.5% 9 Australia 226 1.9% 10 227 2.0% 10 235 2.4% 10 205 2.3% 10 216 2.4% 10
PATIENT & POST-ACUTE CARE BUSINESS AREA USA 2,331 31.3% 1 2,376 29.6% 1 2,115 28.4% 1 2,031 28.6% 1 1,485 23.9% 1 UK 1,109 14.9% 2 1,253 15.6% 2 1,137 15.3% 2 1,091 15.4% 2 1,105 17.8% 2 France 583 7.8% 3 550 6.8% 4 550 7.4% 3 525 7.4% 4 521 8.4% 3 Canada 562 7.5% 4 564 7.0% 3 549 7.4% 4 568 8.0% 3 490 7.9% 4 Germany 490 6.6% 5 497 6.2% 5 478 6.4% 5 486 6.8% 5 329 5.3% 6 Australia 426 5.7% 6 436 5.4% 6 378 5.1% 6 355 5.0% 6 407 6.5% 5 Netherlands 244 3.3% 7 249 3.1% 7 255 3.4% 7 251 3.5% 7 269 4.3% 7 Italy 212 2.8% 8 208 2.6% 8 187 2.5% 8 182 2.6% 8 146 2.3% 9 Austria 176 2.4% 9 168 2.1% 10 165 2.2% 9 161 2.3% 9 58 0.9% 15 Belgium 165 2.2% 10 173 2.2% 9 154 2.1% 11 147 2.1% 10 148 2.4% 8
92 GETINGE ANNUAL REPORT 2016 DATA
Acquisition history 1993–2016
Year Company Business Country Sales 2016 AccuMed Production facility for medical textiles DR SEK 100 M 2016 1st Call Mobility Ltd Medical-device solutions for bariatric patients GB SEK 100 M 2015 GOA Teknoloji Danismanlik Elektronik Low temperature sterilization technology TR SEK 20 M 2014 Pulsion AG Systems for hemodynamic monitoring DE SEK 300 M 2014 Altrax Group Ltd Systems for traceability and quality assurance for sterilization GB SEK 35 M 2014 Cetrea A/S Systems for resource planning DK SEK 30 M 2014 Austmel Pty Ltd Sterilization and thermal processes AU SEK 80 M 2013 LAAx Inc. Cardiac and vascular surgery US SEK 8 M 2013 Trans Medikal Devices Inc. Manufacture of sterilizers and distribution of disinfectors TR SEK 55 M 2013 STS East LLC Service US SEK 25 M 2012 Product rights from Avalon Laboratories Cardiopulmonary US – – 2012 Eirus Medical Critical Care SE – – 2012 Acare Medical Science Ltd Healthcare beds CH SEK 135 M 2012 USCI Distributor JP SEK 150 M 2012 Tecno Hospitalia Distributor CO SEK 4 M 2012 Therapeutic Support Systems (TSS) Wound care US SEK 1,600 M 2012 Steritec Products Mfg Inc. Consumables US SEK 70 M 2011 Blanchet Medical Service Service FR SEK 3 M 2011 Atrium Medical Inc Products for the cardiovascular market US USD 200 M 2011 Combimobil AB Rehabilitation aids SE SEK 2 M 2011 Fumedica Distributor CH SEK 70 M 2011 IDS Medical Equipment Distributor SG SEK 25 M 2011 Mak Saglik Distributor TR SEK 20 M 2011 STS Holding West Service US SEK 20 M 2010 Odelga Service AT SEK 25 M 2008 Datascope Cardiac assist and vascular surgery US USD 231 M 2008 Cardio Research Pty Ltd. Distributor AU AUD 5.1 M 2008 Subtil Crepieux Service FR EUR 8 M 2008 Getus Services Ltd Service NZ NZD 1.1 M 2008 Olmed AB Distributor SE SEK 70 M 2008 Boston Scientific’s Cardiac and Endoscopic vessel harvesting (EVH), anastomosis, stabilizers and instruments US SEK 1,733 M Vascular surgery divisions for surgery on beating hearts and vascular implants 2007 NS Nielsen Equipment A/S Distributor DK – – 2006 Huntleigh Technology Special mattresses for pressure-ulcer treatment, beds for intensive, specialist UK SEK 2,675 M and elderly care vein thrombosis prophylaxis and equipment for fetal and vascular diagnostics. 2006 Comercio E Industria Medicia Consumables for open-heart surgery BR SEK 25 M 2006 OTY GmbH Telemedicine specializing in products and solutions for hospitals’ IT DE SEK 20 M infrastructure focused on the operating room. 2006 Getinge Czech Republic Distributor CZ SEK 10 M 2005 Lancer UK Distributor UK SEK 104 M 2005 La Cahlené Isolator technology and electron sterilization technology FR EUR 40 M 2004 Dynamed Distributor CA SEK 85 M 2004 BHM Medical Inc. Patient management products for the care and elderly care segments CA SEK 206 M 2003 MAQUET AG, Swiss dealer Distributor CH CHF 4.9 M 2003 Siemens LSS Ventilators and anesthesia equipment for the hospital market SE EUR 230 M 2003 Jostra GmbH Equipment and consumables for cardiac surgery DE EUR 90 M 2003 Copharm B.V. Distributor NL EUR 10 M 2002 Heraeus Medical Surgical lamps, ceiling service units and therapy accessories and gas DE EUR 52 M distribution for operating rooms 2001 ALM Surgical lamps FR FRF 490 M 2000 Maquet Surgical tables DE EUR 155 M 2000 Parker Bath Bathing systems for the semi-institutional care market UK SEK 150 M 2000 Lenken Healthcare Distributor IE SEK 65 M 2000 Gestion Techno-Medic Patient lifting systems CA SEK 22 M 1999 Lunatronic Aps Comprehensive IT solutions for the maintenance of sterilization departments DK DKK 15 M 1999 MPT Corp. Washer disinfectors for the Life Science market US SEK 35 M 1998 Egerton Hospital Equipment Specialist beds and anti-decubitus mattresses for hospitals and care facilities UK SEK 45 M 1998 Royal Linden B.V. Infection control NL SEK 60 M 1998 Medibo Patient lifting and pressure-ulcer treatments BE SEK 28 M 1998 OMASA Infection control IT SEK 100 M 1998 SMI/BBC Infection control FR SEK 75 M 1998 Kemiterm Water distillers pure-steam generators for pharmaceutical industry DK DKK 25 M 1998 Pegasus Anti-decubitus products for hospitals and elderly care UK SEK 350 M 1996 MDT/Castle Infection control US – – 1996 Van Dijk Medizintechnik GmbH Infection control DE SEK 30 M 1995 Arjo Products for aging care related to hygiene and patient management SE SEK 1,538 M 1994 Lancer Disinfection products FR FRF 70 M 1993 British Sterilizer Sterilizers UK SEK 15 M 1993 Stirn Disinfection FR – –
GETINGE ANNUAL REPORT 2016 93 CONSOLIDATEDDATA FINANCIAL STATEMENTS
Distribution of sales and earnings by quarter
Percentage distribution of sales for the year Percentage distribution of operating profit Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2012 total 21.6 23.1 23.0 32.2 17.6 21.6 21.1 39.7 Medical Systems 20.5 22.8 23.9 32.8 12.5 19.6 21.0 46.9 Extended Care 24.4 23.5 22.4 29.7 31.7 27.2 24.0 17.1 Infection Control 21.2 23.7 21.4 33.8 14.4 20.0 17.1 48.5 2013 total 22.4 23.8 23.1 30.7 10.7 20.7 19.1 49.6 Medical Systems 21.0 23.7 22.9 32.4 12.1 20.5 16.7 50.7 Extended Care 25.0 24.2 24.0 26.8 9.9 22.4 23.6 44.2 Infection Control 22.4 23.6 22.5 31.5 4.6 17.6 21.6 56.1 2014 total 21.2 23.7 23.3 31.7 –11.0 27.3 25.6 58.2 Medical Systems 20.2 23.4 23.1 33.3 –43.3 35.9 33.1 74.3 Extended Care 23.7 23.8 24.5 27.9 25.7 16.4 19.7 38.2 Infection Control 20.7 24.4 22.4 32.5 10.6 22.9 16.6 49.8 2015 total 22.2 23.8 22.9 31.1 12.3 15.7 15.4 56.6 Surgical Workflows 19.5 22.0 21.9 36.6 2.7 7.1 19.2 71.1 Acute Care Therapies 22.6 24.7 23.3 29.4 17.5 24.6 13.7 44.2 Patient & Post-Acute Care 25.4 24.7 23.7 26.2 20.1 14.3 16.4 49.2 Group functions – – – – –17.6 –24.6 –24.6 –33.2 2016 total 21.4 23.3 23.3 32.0 13.8 20.7 2.1 63.4 Surgical Workflows 18.5 22.7 22.6 36.1 –0.3 14.8 23.7 61.8 Acute Care Therapies 22.1 23.7 23.3 30.9 17.4 31.4 –19.2 70.4 Patient & Post-Acute Care 24.5 23.4 24.2 27.9 31.7 13.5 22.9 31.9 Group functions – – – – –17.4 –20.8 –39.1 –22.7
Historically, most of Getinge’s sales are conducted in the fourth quarter of the year. A significant reason behind this pattern is that portions of customers’ investment budgets are released late in the year. The high capacity utilization in the fourth quarter also results in a considerable portion of the net profit for the year being generated during the final quarter.
Quarterly performance in 2016
Quarter 1 Quarter 2
MSEK MSEK Order intake 8,000 8,000 Order intake Net sales Net sales 6,000 6,000
4,000 4,000
2,000 2,000 Profit before tax Cash flow* Profit before tax Cash flow* 0 0 14 15 16 14 15 16 14 15 16 14 15 16
–2,000 * from operating activities 14 15 16 14 15 16 14 15 16 14 15 16
* from operating activities
Quarter 3 Quarter 4
MSEK MSEK Order intake Net sales 8,000 10,000 Net sales Order intake
6,000 7,500
4,000 5,000
Cash flow* 2,000 2,500 Profit before tax Cash flow* Profit before tax
0 0 14 15 16 14 15 16 14 15 16 14 15 16
–2,000 * from operating activities 14 15 16 14 15 16 14 15 16 14 15 16
* from operating activities Source: Interim Reports
94 GETINGE ANNUAL REPORT 2016 CONSOLIDATED FINANCIAL STATEMENTSDATA
Reconciliation of alternative performance measures
Alternative performance measures refer to financial measures used by the not to be considered a substitute for, but rather a supplement to, the finan- company’s management and investors to evaluate the Group’s earnings and cial statements prepared in accordance with IFRS. The financial measures financial position and that cannot be directly read or derived from the finan- recognized in this report may differ from similar measures used by other cial statements. These financial measures are intended to facilitate analy- companies. sis of the Group’s performance. The alternative performance measures are
THE GROUP’S PRIMARY PERFORMANCE MEASURES
EBITA 2016 2015 Operating profit, SEK M 2,287 2,729 Add-back of amortizations and write-downs of business acquired intangible assets, SEK M 720 761 EBITA, SEK M 3,007 3,490
EBITA BEFORE RESTRUCTURING, ACQUISITION AND INTEGRATION COSTS 2016 2015 Operating profit, SEK M 2,287 2,729 Add-back of amortizations and write-downs of business acquired intangible assets, SEK M 720 761 Add-back of restructuring, acquisition and integration costs, SEK M 1,334 689 EBITA before restructuring, acquisition and integration costs, SEK M 4,341 4,179
CASH CONVERSION 2016 2015 Cash flow from operating activities, SEK M 3,671 3,458 EBITDA, SEK M 4,990 5,187 Cash conversion*, % 73.6% 66.7%
*Cash flow from operating activities in relation to EBITDA
NET DEBT/EQUITY RATIO 2016 2015 Net interest-bearing debt, SEK M 23,389 22,867 Equity, SEK M 20,916 19,593 Net debt/equity ratio*, multiple 1.12 1.17
* Net interest-bearing debt in relation to equity
GETINGE ANNUAL REPORT 2016 95 DATA
Quality & environmental certifications
Medical Systems Production ISO 9001 ISO 13485 ISO 14001 Antalya Turkey Consumables for perfusion products N/A ■ ■ Ardon France Surgical lamps ■ ■ ■ Fairfield/Mahwah USA Cardiac assist N/A ■ i Hechingen Germany Consumables for perfusion products ■ ■ – Hudson USA Products for the cardiovascular market N/A ■ – La Ciotat France Vascular implants N/A ■ ■ Rastatt Germany Surgical tables, other surgical equipment and cardiopulmonary machines ■ ■ ■ Solna Sweden Ventilators and anesthesia machines N/A ■ ■ Suzhou China Ceiling service units, surgical tables and cardiovascular products ■ ■ ■ Pump consoles for DVT products and therapeutic surfaces Disinfection and sterilization equipment Wayne USA Instruments for vascular surgery and vascular implants N/A ■ – Cardiff UK Diagnostics ■ ■ ■ Magog Canada Passive patient lifts ■ ■ ■ Poznan Poland Therapeutic Surfaces, Medical Beds, DVT cuffs, table-top autoclaves ■ ■ ■ Zhuhai China Medical Beds ■ ■ ■ Ankara Turkey Sterilization equipment ■ ■ ■ Denver USA Chemical indicators ■ ■ ■ Getinge Sweden Sterilization equipment ■ ■ ■ Toulouse (Tournefeuille) France Disinfection equipment ■ ■ ■ Vendôme France Isolators ■ N/A ■ Växjö Sweden Disinfection equipment ■ ■ ■ San Cristobal Dominican Republic Slings for patient lifting systems and mattress covers ■ ■ i Feldkirchen Germany Advanced monitoring N/A ■ i
■ Certified plant i Certification planned in 2017
Environmental Data
Hazardous waste,
CO2/Internal sales * Recycled waste, % tons Getinge Group 1.9 (2.2) 81.4 (82.0) 148 (289)
* Direct and indirect carbon emissions deriving from production. Tons/SEK 1,000 M of internal sales.
Social data
2016 2015 2014 2013 2012 Number of employees, December 31 Total 15,582 15,424 15,747 15,183 14,919 Of whom are women, % 36 33 32 32 31
Age distribution, % 20–30, % 17 16 16 16 17 31–40, % 30 29 30 30 29 41–50, % 28 29 29 30 30 51–60, % 21 21 21 20 20 61–70, % 4 5 4 4 4
Health and safety Number of accidents per 100 employees 2.9 2.5 2.9 2.7 2.5 Sickness absence (entire Group) Total sickness absence in regular working hours, % 3.4 2.9 2.7 2.7 2.8 Men, % 2.9 2.4 2.3 2.4 2.5 Women, % 4.3 3.9 3.5 3.3 3.6
96 GETINGE ANNUAL REPORT 2016 ADDRESSES
Addresses
HEAD OFFICE Getinge Canada Ltd Maquet Czech Republic s.r.o. Getinge AB 90-300 Matheson Boulevard West Na Strzi 65/1702, Box 8861, MISSISSAUGA, ON, L5R 3R3 CZ-140 00 Prague 4 SE-402 72, Gothenburg Tel: +1 905 629 8777 Tel: +420 731 991 522 Tel: +46 10 335 0000 Maquet-Dynamed Inc DENMARK AUSTRALIA 235 Shields Court, ArjoHuntleigh A/S ArjoHuntleigh Healthcare Pty Ltd Markham, Ontario, L3R 8V2 Vassingerödvej 52, Box 330, Tel: +1 905 752 3300 Lynge, DK-3540 Hamilton Hill, Perth AU-6163 Tel: +45 4 913 8486 Tel: +61 89 337 4111 CHINA ArjoHuntleigh (Shanghai) Cetrea A/S Getinge Australia Pty Ltd Medical Equipment Co. Ltd. Brendstrupgaardsvej 21F Level 1/205. Queensport Road North 4F, No.3, Lane 128, Lin Hong Road Aarhus, DK-8200 Murarrie, Queensland, AU 4172 CN-200 335 Shanghai Tel: +45 38 400 570 Tel: +61 1800 438 4643 Tel: +86 21 61973999 Getinge Danmark A/S Maquet Australia Pty Ltd Acare Medical Science Co. Ltd. Industriparken 44B, Level 2, 4 Talavera Road, No. 6, Hongxingyi Road, Hongwan Industrial Ballerup, DK-2750 AU-2113 Macquarie Park Park, Nanping, Xiangzhou District, Tel: +45-459 32 727 Tel: +61 1800 605 824 CN-519000 Zhuhai, China Tel: +86 756 6326 108 Getinge IT Solutions ApS AUSTRIA Amaliegade 4 ArjoHuntleigh GmbH Getinge (Shanghai) Trading Co. Ltd. DK-1256 Copenhagen K Lemböckgasse 49, Stg. A/ 4.OG No. 3, Lane 128, Lin Hong Road, Tel: +45 33 33 88 55 AT-1230 Vienna CN-200 335 Shanghai Tel: +43-1-866 56 4436 Tel: +86 21 61973999 Maquet Danmark A/S Industriparken 44 B, Maquet Medizintechnik Getinge (Suzhou) Co. Ltd. DK-2750 Ballerup Vertrieb und Service GmbH No. 158, Fang Zhou Road, SIP, Tel: +45 4694 4216 Kärntner Ring 12, CN-215024 Suzhou, Jiangsu AT-1010 Vienna Tel: +86 512 6283 8966 DOMINICAN REPUBLIC Tel: +43 1 8651 4870 Getinge Dominican Republic, SA Maquet (Shanghai) Carretera sanchez, KM 18 1/2 ; BELGIUM Medical Equipment Co. Ltd. Cameron Clark street, building 9 ArjoHuntleigh NV/SA No. 158, Fang Zhou Road, SIP, 91000 Haina, San Cristobal Evenbroekveld 16, CN-215024 Suzhou, Jiangsu Tel: 809-908-0055 Erpe-Mere, BE-9420 Tel: +86 512 6283 8966 Tel: +32 53 60 73 80 FINLAND Maquet (Shanghai) Getinge Finland Oy Getinge NV Medical Equipment Co. Ltd. Ängsgatan 8, Evenbroekveld 16, No. 3, Lane 128, Lin Hong Road, FI-02200 Espoo Erpe-Mere, BE-9420 CN-200 335 Shanghai Tel: +358-96 82 41 20 Tel: +32 33 28 10 12 Tel: +86 21 619 739 99 Maquet Finland OY Maquet Belgium NV Maquet (Suzhou) Co. Ltd. Niittykatu 8, Evenbroekveld 16, No. 158, Fang Zhou Road, SIP, FI-02200 Espoo Erpe-Mere, BE-9420 CN-215024 Suzhou, Jiangsu Tel: +358-96 82 41 250 Tel: +32 53 60 7380 Tel: +86 512 6936 9206 FRANCE BRAZIL COLOMBIA ArjoHuntleigh SAS Maquet do Brasil Maquet Colombia S.A.S. 2 Avenue Alcide de Gasperi Equipamentos Medicos Ltda. Edificio Astoria Carrera 16 Nº 95 59436 RONCQ CEDEX Rua Tenente Alberto Spicciati, – 70 Oficina 701 Tel: +33-320 281 313 200 Barra Funda, Bogota, D.C. São Paulo, BR-01140-130 Tel: +57 1 7438124 Getinge France SAS Tel: +55 11 2608 7400 7 avenue du Canada CS20049 COSTA RICA 91942 Courtaboeuf Les Ulis Maquet Cardiopulmonary do Getinge Shared Services Costa Rica SA Tel: +33-164 868 900 Brasil Industria e Comercio Ltda. Avenida Escazú Edificio 101B Piso #5 Jordanesia - Cajamar / SP Escazú, San José 10203 Getinge Infection Control SAS São Paulo, BR- 07755-240 Tel: +506 4100 5523 30, Boulevard de l Índustrie, Tel: +55 11 4898 7768 FR-31170 Tournefeuille CZECH REPUBLIC Tel: +33-561 155 111 CANADA ArjoHuntleigh s.r.o. ArjoHuntleigh Canada Inc. Hlinky 118, Getinge La Calhène 90-300 Matheson Boulevard West Brno, CZ-603 00 1, Rue du Comté de Donegal, MISSISSAUGA, ON, L5R 3R3 Tel: +420 225 092 307 FR-41100 Vendome, Tel: +1 905 238 7880 Tel: +33-254 734 747 Getinge Czech Republic, s.r.o ArjoHuntleigh Magog Inc. Na Strzi 65/1702, Getinge Lancer SAS 2001, Tanguay, CZ-140 00 Prague 4 30, Boulevard de l Índustrie, Magog, Quebec J1X 5Y5 Tel: +42 02 51 56 42 86 FR-31170 Tournefeuille Tel: +1-819 868 0441 Tel: +33-561 155 111
GETINGE ANNUAL REPORT 2016 97 ADDRESSES
Intervascular SAS HONG KONG KOREA ZI Athelia I ArjoHuntleigh (Hong Kong) Ltd. ArjoHuntleigh Korea Co. Ltd. La Ciotat, FR-13600 Unit 1510-1517 Kowloon 13F GeumKang Building, Tel: + 33-442 084 646 Commerce Center, Tower 2, 681 Yeoksam-dong, 51 Kwai Cheong Road, Kwai Chung, Gangnam-gu, 06143, Seoul, Maquet SAS New Territories, Hong Kong Tel: +82 2567 6501 Parc de Limère Tel: +852-2207 6363 Avenue de la Pomme Getinge Korea Co. Ltd. de Pin CS 10008, Getinge Hong Kong Company Ltd. 13F, KeumKang Building, 304, FR-45074 Orleans, Ardon Unit 1510-1517 Bongeunsa-ro Tel: +33 238 258 888 Kowloon Commerce Center, Tower 2, Gangnam-gu, 06143, Seoul, 51 Kwai Cheong Road, Kwai Chung, Tel: +82 2567 1240 GERMANY New Territories, Hong Kong ArjoHuntleigh GmbH Tel: +852 2207 6328 Maquet Medical Korea Co., Ltd. Peter-Sander-Strasse 10, 13F, KeumKang Building, 304, DE-55252 Mainz-Kastel, Getinge Group Hong Kong Ltd Bongeunsa-ro Tel: +49-613 418 60 Unit 1510-1517 Gangnam-gu, 06143, Seoul, Kowloon Commerce Center, Tower 2, Tel: +82 255 822 71 Getinge Vertrieb und Service GmbH 51 Kwai Cheong Road, Kwai Chung, Kehler Strasse 31 New Territories, Hong Kong MEXICO DE-76437 Rastatt Tel: +852-2207 6111 Maquet Mexicana, S. de R.L. de C.V. Tel: + 49-722 293 26 45 World Trade Center INDIA Calle de Montecito no 38, piso 10 HCS Homecare Services GmbH ArjoHuntleigh Healthcare India Pvt. Ltd. oficina 17, Colonia Nápoles Peter-Sander-Straße 10, Plot No. 8, Shah Industrial Estate, 03810, México, D.F. DE- 55252, Mainz-Kastel Off Veera Desai Road, Andheri (West) Tel: +52 55 9000 8970 Tel: +49-613 418 60 Mumbai, India 400053 Tel: + 91 22 6694 6697 Pulsion Medical Systems S. de R.L. de C.V. Huntleigh Nesbit Evans Hamburgo No. 206 Int. 404, Col. Juarez Healthcare GmbH Getinge India Pvt. Limited 06600 Mexico; D.F. Industriering Ost 66, Plot No. 8, Shah Industrial Estate, Tel: +52 55 5207 6115 DE-47906, Kempen Off Veera Desai Road, Andheri (West) Tel: +49-215 255 11 11 Mumbai, India 400053 NETHERLANDS Tel: + 91 22 4260 8000 ArjoHuntleigh Netherlands BV Maquet Financial Services GmbH Biezenwei 21, Kehler Strasse 31 Maquet Medical India Pvt. Ltd Tiel, NL-4004MB DE-76437 Rastatt Mehta Trade Centre, Tel: +31 344 640 800 Tel: + 49-722 293 20 Sir Mathuradass Vissanji Road, Shivaji Colony, Andheri (East) Getinge BV Maquet Cardiopulmonary AG Mumbai, IN – 400 099 Biezenwei 21, Kehler Strasse 31 Tel: +91 22 406 921 00 Tiel, NL-4004MB DE-76437 Rastatt Tel: +31 (0) 344-809 900 Tel: +49-722 293 20 IRELAND ArjoHuntleigh Ireland Ltd Maquet Netherlands B.V. Maquet Medical Systems AG EA House Damastown Industrial Park Oscar Romerolaan 3, Kehler Strasse 31 Dublin 15 NL-1216, TJ Hilversum, DE-76437 Rastatt Tel: +353 01 809 8960 Tel: +31 35 62 55 320 Tel: +49-722 293 20 Maquet Ireland Maquet Verwaltungs BV Maquet GmbH B6 Calmount Park, Ballymount, Biezenwei 21, Kehler Strasse 31 Dublin 12 Tiel, NL-4004MB DE-76437 Rastatt Tel: +353 1 426 0032 Tel: +31 344 640 800 Tel: +49-722 293 20 ITALY NEW ZEALAND Maquet Vertrieb und Service ArjoHuntleigh S.p.A. ArjoHuntleigh Limited Deutschland GmbH Via Giacomo Peroni 400-402, 34, Vestey Drive Mt. Wellington, Kehler Strasse 31 Rome, IT-00131 Auckland 1060 DE-76437 Rastatt Tel: +39-068 742 62 11 PO Box 132-262, Sylvia Park, Tel: +49-722 293 20 Auckland 1644 Getinge S.p.A. Tel: +64 9 573 5344 MAQUET Hospital Solutions GmbH Via Giacomo Peroni 400/402, Kehler Strasse 31 Rome, IT-00131 NORTHERN IRELAND DE-76437 Rastatt Tel: +39-066 56 631 ArjoHuntleigh UK (Belfast Office) Tel: +49-722 293 20 19 Heron Road Sydenham Business Park Maquet Italia S.p.A. BT3 9LE, Belfast MediKomp GmbH Via Gozzano 14, Cinisello Balsamo Tel: +44 (0)28 9050 2000 Kehler Strasse 31 Milan, IT-20092 DE-76437 Rastatt Tel: +39 026 111 35200 NORWAY Tel: +49-722 293 20 ArjoHuntleigh Norway AS JAPAN Olaf Helsets vei 5 Pulsion Medical Systems SE Getinge Group Japan K.K. Oslo, NO-0694 Hans-Riedl-Strasse 21 SPHERE TOWER TENNOZ 23F Tel: +47 2208 0050 DE-85622 , Feldkirchen, 2-2-8 Higashi-shinagawa, Shinagawa-ku Tel: +49-894 599 140 Tokyo 140-0002 Tel: +81 3 5463 8310
98 GETINGE ANNUAL REPORT 2016 ADDRESSES
Getinge Norge AS SOUTH AFRICA Maquet Critical Care AB Strandveien 13 ArjoHuntleigh South Africa Pty Ltd Box 6108 Lysaker, NO-1366 Box 16216, SE-171 06, Solna, Tel: +47 2303 5200 Pretoria North, 0116 Tel: +46 (0)10 335 7300 Tel: +27 12 527 2000 POLAND Maquet Nordic AB ArjoHuntleigh Polska Sp.z.o.o. Huntleigh Africa Pty Ltd Röntgenvägen 2, ul. Ks. Wawrzyniaka 2, Box 16216, SE-171 54, Solna, Komorniki, PL-62-052 Pretoria North, 0116 Tel: +46 (0)10-335 7736 Tel: +48 61 662 1550 Tel: +27 12 527 2000 SWITZERLAND Getinge IC Production Poland Sp.z.o.o. Maquet Southern Africa (PTY) Ltd. ArjoHuntleigh AG Szkolna 30, Box 16216, Fabriksstrasse 8, Plewiska, PL-62064 Pretoria North, 0116 CH-4614 Haegendorf, Solothurn Tel: +48 61 630 9900 Tel: +27 12 527 2000 Tel: +41-61 3379 777
Getinge Poland Sp.z.o.o. SPAIN Getinge Schweiz AG ul. Osmańska 14, Getinge Group Spain S.L. Quellenstrasse 41b 02-823 Warsaw C/Marie Curie 5,Edificio Alfa Planta 6 CH-4310 Rheinfelden Tel: +48-22 882 06 26 ES-28521 Rivas Vacia Madrid Tel: +41 61 836 47 70 Tel: +34 91 678 1652 Maquet Polska Sp.z.o.o. Maquet AG ul. Osmańska 14, SWEDEN Wilerstrasse 75, 02-823 Warsaw ArjoHuntleigh AB CH-9200 Gossau/SG Tel: +48 22 882 06 44 Hans Michelsensgatan 10 Tel: +41 71 3350 303 SE-211 20, Malmö Getinge Shared Services Sp.z.o.o. Tel: +46 10 335 4500 TAIWAN Klimeckiego 1 Getinge Group taiwan Co. Ltd. 30-705 Krakow Arjo Hospital Equipment AB Rm. A1, 6F., No.16, Sec. 4, Nanjing E. Rd., Tel: +48 12 385 42 22 Hans Michelsensgatan 10 Songshan Dist., Taipei city 105 SE-211 20, Malmö Tel: + 886-2-81616588 PORTUGAL Tel: +46 10 335 4500 Getinge Group Portugal Unipessoal Lda THAILAND Rua Poeta Bocage, 2 -2G, ArjoHuntleigh International AB Maquet Thailand PT-1600-233, Lisbon Hans Michelsensgatan 10 5 soi 4 Krungthep Kreetha Road Tel: +351 214 189 815 SE-24138, Malmö Huamark Bangkapi Tel: +46 10 335 45 00 TH-10240, Bangkok, RUSSIA Tel: +66 2 704 4388 Maquet LLC Arjo Scandinavia AB Stanislavskogo street 21, Building 3 Hans Michelsensgatan 10 TURKEY Moscow, RU-109004 SE-21120, Malmö Getinge Saglik Urunleri Tel: +7 495 514 0055 Tel: +46 10 335 45 00 Ith.Ihr.Tic.San. Ve Ltd. Buyukhanlı Plaza Kucukbakkalkoy SERBIA CombiMobil AB Mahallesi Defne Sokak No:3 Kat.8 Getinge Group South East Europe Ltd. Hans Michelsensgatan 10 34750 Istanbul Spaniskih Boraca 3, SE-24121, Malmö Tel: +90 216 360 62 74 11070, Belgrade, Tel: +46 10 335 45 00 Tel: +381 11 7856370 Maquet Cardiopulmonary Medikal Getinge AB Serbest Bolge R Ada,108/1,109/1,110/1,111/1 SINGAPORE P.O. Box 8861 Parseller 1 ArjoHuntleigh Singapore Pte Ltd SE-402 72, Gothenburg Cadde Dış Kapı No:8 Adres 6 Temasek Blvd #29-00 Suntec City Tower 4 Tel: +46 10 335 0000 No: 2419050956 Yeni Liman Singapore, SG- 38986 TR-07070 Antalya Tel: +65 6293 3387 Getinge Disinfection AB Box 1505 Maquet Tibbi Sistemler San. Ve Tic.Ltd. A.S. Getinge Singapore Pte. Ltd. SE-35115, Växjö Buyukhanlı Plaza Kucukbakkalkoy 20, Bendemeer Road #06-04 Cyberhub Building Tel: +46-10 335 9800 Mahallesi Defne Sokak No:3 Kat.8 Singapore 339914 34750 Istanbul Tel: +65-6 396 7298 Getinge Infection Control AB Tel: +90 216 444 66 78 Box 69 Maquet South East Asia Pte. Ltd. SE-305 05, Getinge Trans Medikal Aletler Sanayi ve Tic A.Ş 20, Bendemeer Road #06-04 Cyberhub Building Tel: +46 10 335 0000 Ahievran 1. OSB Kırımhanlığı Cad. Singapore 339914 No:6 Sincan Tel: +65 6 296 1992 Getinge International AB TR-06930, Ankara, Box 69 Tel: +90 312 385 77 20 SLOVAKIA SE-305 05, Getinge Maquet Slovakia s.r.o. Tel: +46 10 335 0000 Getinge Stericool Medikal Pribinova 25, Aletler Sanayi ve Bratislava, SK-81109 Getinge Sterilization AB Ticaret Anonim Şirketi Tel: +42 1 2335 59150 Box 69 Ahievran 1. OSB Kırımhanlığı Cad. SE-305 05, Getinge No:6 Sincan Tel: +46 10 335 0000 TR-06930, Ankara, Tel: +90 312 387 39 40
GETINGE ANNUAL REPORT 2016 99 ADDRESSES
UKRAINE Getinge UK Ltd Lancer Sales USA Inc Maquet LLC 17 Maisies Way 1150 Emma Oaks TRL STE 140 Glybochitskaya 17 d, Building 1 DE55 2DS South Normanton, Derbyshire FL-32746 LAKE MARY FL 04050 Kiev Tel: +44 (0) 1773 814730 Tel: +1-4073278488 Telefon: +38(044) 207-43-43 Maquet Ltd MAQUET Cardiovascular LLC UNITED ARAB EMIRATES 14-15 Burford Way, Boldon Business Park 45 Barbour Pond Drive ArjoHuntleigh Middle East FZ LLC Sunderland, Tyne & Wear, NE35 9PZ Wayne, New Jersey 07470 G005 Nucleotide Complex Tel: +44 191 519 6200 Tel: +1 303 660 4201 Dubai Science Park Box 214742 Dubai, USA Datascope Corp. Tel: +971 4 447 0942 ArjoHuntleigh Inc. 15 Law Drive 2349 West Lake Street, Suite 250, 07004, Fairfield, NJ Getinge Group Middle East FZ-LLC Addison, IL 60101 Tel: +1-800-777-4222 G005 Nucleotide Complex Tel: +1 303 660 4201 Dubai Science Park SteriTec Products MFG Inc Box 214742 Dubai, Atrium Medical Corporation 74 Inverness Dr. E Tel: +971 4 447 0963 5 Wentworth Drive Englewood, CO 80112 Hudson, New Hampshire 03051-4929, Tel: +1 303 660 4201 UNITED KINGDOM Tel: +1 603 880 1433 Altrax Group, Ltd Unit 5 Bowling Hill Business Park, Chipping Sod- Getinge USA Inc bury 1777 East Henrietta Road, Rochester BS37 6JL, Bristol NY 14623-3133 Tel: +44 145 431 8373 Tel: +1 585 475 1400
ArjoHuntleigh – UK Getinge-La Calhene USA ArjoHuntleigh House 1325 S. Frandsen Avenue Houghton Hall Business Park Rush City, MN55069 Houghton Regis Tel: +1 320 358 4713 Bedfordshire, LU5 5XF Tel: +44 (0) 1582 745 767
100 GETINGE ANNUAL REPORT 2016 DEFINITIONS - READING GUIDE - DISTRIBUTION POLICY
Definitions
Financial terms Medical terms Low temperature sterilization. Low tempera- Working capital. Average total assets with a Anesthesia. Narcosis. ture sterilization of instruments is used in mini- mally invasive surgery, a type of instrument that reversal of cash and cash equivalents, other ARDS (Acute respiratory distress syndrome). is extremely sensitive to the high temperatures provisions, accounts payable and other non-in- Life-threatening lung damage. terest-bearing liabilities. and pressure of a steam sterilization process. Sterilizer. A type of pressure-cooker for steril- Counterpulsation. Therapy for treatment of Return on working capital. Rolling 12 months’ ization. operating profit with add-back of restructuring, resistant angina. Cardiac Assist. Technology that improves blood integration and acquisition expenses in relation Minimally invasive instruments. Various types circulation in a patients’ coronary artery in the to working capital. of instruments that make it possible to conduct heart by forcing blood into the coronary artery treatment and other measures through very Return on shareholders’ equity. Rolling 12 with the help of a balloon pump placed in the small operations without the need for major sur- months’ profit after tax in relation to average aorta. The pump works in synchronization with gery. The benefits of minimally invasive opera- shareholders’ equity. the heart rhythm and the increased blood circu- tions include less pain for the patient, shorter Cash conversion. Cash flow from operating lation supplies oxygen to the heart muscle, rehabilitation periods and lower costs. activities in relation to EBITDA. which thus improves its ability to pump. Neonatal. Newborn infant during the first month. Dividend yield. Dividend in relation to the mar- Cardiac Surgery. Heart surgery. Perfusion. Artificial circulation of body fluids, ket share price on December 31. Cardiopulmonary. Pertaining or belonging to such as blood. EBIT. Operating profit. both heart and lung. Perfusion products. Products that handle blood EBITA. Operating profit before amortization and Cardiovascular. Pertaining or belonging to both circulation and oxygenation during cardio sur- write-down of intangible assets identified in heart and blood vessels. gery, often referred to as heart-lung machines. conjunction with corporate acquisitions. Deep vein thrombosis (DVT). Formation of a Prevention/prophylaxis. Preventive activity/ EBITA margin. EBITA in relation to net sales. blood clot in a deep leg vein. treatment. EBITDA. Operating profit before depreciation/ Endoscope. Equipment for visual examination Pressure ulcers. Ulcers that arise as a result of amortization and write-down. of the body’s cavities, such as the stomach. blood flow to the skin being limited by external EBITDA margin. EBITDA in relation to net sales. EVH (Endoscopic Vessel Harvesting). Minimally pressure. Most often affects patients with lim- Cash flow per share. Cash flow after invest- invasive surgical interventions, to explant a ited mobility. healthy blood vessel through endoscopic means. ments in tangible assets divided by the number Vascular intervention. A medical procedure of shares. Extracorporal life support. Extracorporal sup- conducted through vascular puncturing instead Net debt/equity ratio. Net interest-bearing debt port, for instance external oxygenation of blood of using an open surgery method. through medical technology. in relation to equity. Vein. Blood vessel that carries blood to the heart. Hemodynamics. Change in pressure and flow of P/E ratio. Share price (final price) divided by Ventilator. Maintaining a patient’s ability to blood in the cardiovascular system. earnings per share. breathe through a ventilator (respirator). Interest-coverage ratio. Profit after net finan- Cardiovascular diseases. Heart and blood ves- cial items plus interest expenses and add-back sel diseases. of restructuring costs, as a percentage of inter- Kinetic Therapy. A function in Getinge’s high- Geographic areas est expenses. tech RotoProne™ hospital bed. This function Americas. North, South and Central America. Operating margin. Operating profit in relation offers continuous rotation of immobile patients APAC. Asia and Pacific. from side to side down to 40° and up to 62° to to net sales. EMEA. Europe, Middle East and Africa. treat and prevent complications in the lungs. Equity/assets ratio. Shareholders’ equity in relation to total assets. Surgery perfusion. A heart-lung machine con- ducts the work of the heart and lungs during an Earnings per share. Net profit attributable to operation. Parent Company shareholders in relation to average number of shares. Artificial grafts. Artificial vascular implants. Recurring revenue. Revenues from consum- ables, service, spare parts and similar items.
Reading guide and distribution policy
Reading guide Distribution policy • Getinge Group is referred to as Getinge in The printed version of Getinge AB’s Annual the Annual Report. Report is only distributed to shareholders who • Figures in parentheses pertain to operations expressly request a copy. The Annual Report is in 2015, unless otherwise specified. also available in its entirety at the Group’s web- site: www.getinge.com • Swedish kronor (SEK) is used throughout. • Millions of kronor are abbreviated SEK M. • All figures pertain to SEK M, unless otherwise specified. • Information provided in the Annual Report concerning markets, competition and future growth constitutes Getinge Group’s assess- ment based mainly on material compiled within the Group.
GETINGE ANNUAL REPORT 2016 101 ANNUAL GENERAL MEETING AND NOMINATION COMMITTEE
Annual General Meeting and Nomination Committee
Annual General Meeting Nominee-registered shares Nomination Committee The Annual General Meeting will be held Shareholders whose shares are registered Getinge AB’s interim report for the third on March 29, 2017, at 2:00 p.m. in the name of a nominee must have tem- quarter of 2016 contained instructions for in Kongresshallen at Hotel Tylösand, porarily registered their shares in their shareholders on how to proceed to sub- Halmstad, Sweden. own name, well in advance of March 23, mit proposals to Getinge’s Nomination 2017, to be able to participate at the Committee and how to propose motions Application Annual General Meeting. Shareholders to be addressed at the Annual General Shareholders wishing to participate at the represented by proxy must submit a Meeting. Annual General Meeting should: power of attorney to the company prior to • Be registered in the shareholders’ regis- the meeting. Anyone representing a legal Dividend ter kept by Euroclear, not later than entity must have a copy of the registra- The Board of Directors and the CEO pro- March 23, 2017 tion certificate or a corresponding autho- pose that a dividend for 2016 of SEK 2.00 • Inform the company of their intention rization document that indicates the (2.80) per share be paid, totaling SEK 477 to participate not later than March 23, proper authorized signatory. M (667). The Board’s proposed record 2017 date is March 31, 2017. Euroclear antici- pates being able to forward the dividend Applications can be submitted in to shareholders on April 5, 2017. the following ways: • Getinge’s website: www.getinge.com • By conventional mail to: Getinge AB, Att: “AGM”, P.O. Box 7841, SE-103 98 Stockholm, Sweden • By telephone: +46 (0) 10 355 08 18
102 GETINGE ANNUAL REPORT 2016 FINANCIAL INFORMATION
Financial information
Updated information on, for example, the Getinge share and corporate governance is available on Getinge’s website www.getinge.com.
The Annual Report, year-end report and interim reports are published in Swedish and English and are available for download at www.getinge.com.
The Annual Report can also be ordered from: Getinge AB Att: Group Communications P.O. Box 8861 SE-402 72, Gothenburg, Sweden Tel: +46 (0) 10 335 00 00
Financial information The following information will be published for the 2017 financial year:
• April 25, 2017: Interim report January–March • July 17, 2017: Interim report January–June • October 18, 2017: Interim report January–September • January 30, 2018: Year-End Report 2017 • March 2018: Annual Report for 2017
GETINGE ANNUAL REPORT 2016 103 104 GETINGE ANNUAL REPORT 2016 Production: Solberg Print: Elanders Annual report 2016 report Annual AB GETINGE
Getinge AB Lindholmspiren 7a Box 8861 402 72 Göteborg Sweden
Phone: +46 (0)10-335 00 00 E-mail: [email protected] www.getinge.com
Getinge is a global provider of innovative solutions for operating rooms, intensive-care units, sterilization departments and for life science companies and institutions. Based on our first-hand experience and close partnerships with clinical experts, healthcare professionals and medtech specialists, we are improving the every-day life for people, today and tomorrow.